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Understanding Romania's Double Taxation Avoidance Agreements: Insights from Official ANAF Resources

DTAA Double Taxation Avoidance Agreements


Key Aspects of Romania's International Tax Treaties


Romania has entered into several Double Taxation Avoidance Agreements (DTAAs) to prevent the issue of the same income being taxed by two different jurisdictions. This article delves into the resources available through the National Agency for Fiscal Administration (ANAF) and highlights important considerations regarding language discrepancies in these agreements.


Explore ANAF's Comprehensive List of Tax Treaties


ANAF's official page provides a detailed list of all Double Taxation Conventions that Romania has signed. This resource is indispensable for professionals navigating international tax laws. Access the ANAF and list here. Up-to-date information here.


The Importance of Language in Tax Agreements


It is crucial to pay attention to the prevailing language used in these agreements as translation discrepancies can lead to different interpretations.


As an example, in case of the Romania-Serbia Agreement, Article 12 (Royalties), paragraph 4:


EN version of the Agreement: “4. The provisions of paragraphs 1 and 2 shall not apply fi the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shal apply.“ (grammar errors preserved to ensure authenticity)
RO version of the Agreement: “4. Prevederile paragrafelor 1 şi 2 nu se aplică, dacă beneficiarul efectiv al redevenţelor, fiind un rezident al unui stat contractant, desfăşoară activitate de afaceri în celălalt stat contractant din care provin redevenţele, printr-un sediu permanent situat acolo, sau prestează în acel celălalt stat profesii independente printr-o bază fixă situată acolo, iar dreptul sau proprietatea pentru care se plătesc redevenţele este efectiv legată de un asemenea sediu permanent sau bază fixă. În această situaţie se aplică prevederile art. 7 sau ale art. 15, după caz.”
RS version of the Agreement: “4. Одредбе из ст. 1. и 2. овог члана не примењују се ако стварни власник ауторских накнада, резидент државе уговорнице, обавља пословање у другој држави уговорници у којој ауторске накнаде настају, преко сталне јединице која се налази у тој другој држави уговорници или у тој другој држави обавља самосталне личне делатности из сталне базе која се налази у тој другој држави, а право или имовина на основу којих се ауторске накнаде плаћају стварно припадају тој сталној јединици или сталној бази. У том случају примењују се, према потреби, одредбе чл. 7. или 15. овог уговора.”

In this case, the specific discrepancy across languages is the concept of “effectively connected with”: it is properly taken over from the English version to the Romanian version (“efectiv legată de”), however, the Serbian version is different (“стварно припадају тој” - meaning “actually belong to”), which creates differences in interpretation and different tax exposure.


Resolving Interpretation Conflicts


To eliminate bias, we need to look at the paragraph that states which version is prevailing - and problem solved.


For instance, in the same example Romania-Serbia, the last paragraph states:


“DONE at Belgrade, this 16th, of May 1996 in two originals, in the Serbian, Romanian and English languages, both originals being equally authentic. In case of any divergency of interpretation, the English text shall prevail.”

Next step is to obtain the English text - if ANAF did not publish it, then the Ministry of Foreign Affairs of either country must have it - and use the prevailing language text throughout, for consistency and to resolve any discrepancies.


Conclusion


Romania's Double Taxation Avoidance Agreements play a crucial role in shaping the tax obligations of entities operating across borders. By understanding the official documents and recognising language nuances, multinational companies can better navigate the complexities of international tax laws. Ensure you consult the prevailing language text for the most accurate tax interpretation.

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