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1. A history of tax
2. What double taxation means?
3. Romanian double taxation
prevention
4. Convention between Romania
and Lithuania
 R   

ïax has an extremely long-established history. ..

As a general rule, tax is the source that is best exploited by

government.
It is imposed on individuals and companies to finance services
that the State is obligated to provide and to meet its goals.

On extremely rare occasions, governments have used sources

other than tax; for instance, income from natural resources.
However, as a general rule, most governments use the collection
of taxes as the main tool for financing their expenses.

«
«
ïax is divided into two main categories, progressive and regressive
taxes.
Progressive tax is graduated and its rate varies according to the
taxpayer's income.
Regressive tax is a tax at a fixed rate irrespective of the taxpayer's
income.
For example, sales tax is imposed on sales, at a fixed rate, on rich and
poor alike. It is regressive in that it is a tax that is proportionally greater
on the income of a poor man than that of a rich man.
 'ouble taxation

Romania has signed a large number of ïreaties for the

avoidance of double taxation even before 1989. Partner-
countries range from the United Kingdom and Germany to
ïhailand, Ecuador, Kuweit etc.
 |
 
  

 



Romania is a signatory to a ïreaty for the Prevention of 'ouble
ïaxation with many countries all over the world. *

A 'ouble ïaxation Prevention ïreaty, in principle, enables offsetting

tax paid in one of 2 countries against the tax payable in the other, in
this way preventing double taxation.

Another important factor is the grant of an exemption or tax at a

reduced rate on certain receipts such as interest, royalties,
dividends, capital gains and others that are connected with a
transaction carried out between parties associated with the 'ouble
ïaxation Prevention ïreaty.

When certain income is taxable under the Romanian Income ïax

Ordinance but there is an exemption (reduced tax) under any
ïaxation ïreaty, the income is taxed, if at all, but only according to
the provisions of the ïaxation ïreaty.
President of the Republic of Lithuania, received the
head of state of Romania and signed the agreement on
avoidance of double taxation on 26 november 2001
 Convention between
Romania and Lithuania

(art 2) ïhe Republic of Lithuania and Romania,

desiring to promote and strengthen the economic

relations by concluding a Convention for the avoidance
of double taxation and the prevention of fiscal
evasion with respect to taxes on income and on
capital, have agreed as follows:
 ïhere shall be regarded as taxes on income and on
capital all taxes imposed on total income, on total capital, or
on elements of income or of capital, including taxes on gains
from the alienation of movable or immovable property, as
well as taxes on capital appreciation.
ïhe existing taxes to which the Convention shall apply
are in particular:

in the case of Romania:

-the tax on income derived by individuals;

-the tax on profits;
-the tax on salaries and other similar remuneration;
-the tax on agriculture income;
-the tax on dividends;
-the tax on building;
-the tax on land;
 m the case of Lm
 m

-

x o profm
 of lgl pr 

(jrmdm m m pl  mk
m);
-

x  m
m  
rl pr 
(mm m m pjm mk
m);
-

x  
rprm m g 

-w d
pm
l
(plūk   vl
ybm m kpm
l djmmą);
-
 mmmvbl prpr
y
x
( kml jmj
r
 mk
m);
-
 l d
x
( mė mk
m);
 For the purposes of this Convention, the term "resident
(art 4)

of a Contracting State" means any person who, under the laws

of that State, is liable to tax therein by reason of his domicile
or any other criterion of a similar nature.

ïhis term, however, does not include any person who is

liable to tax in that State in respect only of income from
sources in that State or capital situated therein.

When an individual is a resident of both Contracting

States, then his status shall be determined as follows:

<he shall be deemed to be a resident only of the State in

which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be
deemed to be a resident only of the State with which his
personal and economic relations are closer (centre of vital
interests)>
 I
 drivd by a rsid t f a C tra
ti g Stat fr
(art 6)

ivabl prprty (i
ludi g i
 fr agri
ultur r frstry)
situatd i th thr C tra
ti g Stat ay b taxd i that thr
Stat.

ïh prfits f a  trpris f a C tra

ti g Stat shall b
(art 7)

taxabl  ly i that Stat u lss th  trpris

arris  busi ss i
th thr C tra
ti g Stat thrugh a pra  t stablish t
situatd thri .

Divid ds paid by a
pa y whi
h is a rsid t f a C tra
ti g
( art 10 )

Stat t a rsid t f th thr C tra

ti g Stat ay b taxd i
that thr Stat.

I trst arisi g i a C tra

ti g Stat a d paid t a rsid t f
(art 11)

th thr C tra

ti g Stat ay b taxd i that thr Stat.
 Cmm a  raltm armm g m a C tractm g Stat a 
(art 12-18)

pam t a rm t f th thr C tractm g Stat a b tax m that

thr Stat. (A  thr, lmk capmtal gam , m p  t pr al
rvmc, p  t pr al rvmc, mrctr f, artmt a 
prt)

P m  pam t a rm t f a C tractm g Stat m c mratm

(art 19)

f pat pl t hall b taxabl   m that Stat.

Saarm , wag a  thr mmar ru ratm , thr tha a

(art 20)

p m , pam b a C tractm g Stat thrf t a m mvmua m

rpct f rvmc r r t that Stat ha b taxab   m
that Stat.
 Pa t which a tud t, a appr tic or a trai  who i or wa
(art 21)

idiatl bfor viiti g a Co tracti g Stat a rid t of th othr

Co tracti g Stat a d who i pr t i th firt- tio d Stat oll
for th purpo of hi ducatio or trai i g rciv for th purpo of hi
ai t a c, ducatio or trai i g hall ot b taxd i that Stat,
providd that uch pa t ari fro ourc outid that Stat.21

Profor a d raarch. A i dividual who viit a Co tracti g

(art 22)

Stat for th purpo of tachi g a d who i or wa idiatl bfor

that viit a rid t of th othr Co tracti g Stat, hall b xptd
fro taxatio i th firt- tio d Co tracti g Stat o ru ratio
for uch tachi g or rarch for a priod ot xcdi g two ar fro
th dat of hi firt viit for that purpo. 22
(art 25) Elimination of double taxation

In te
ae of Romania double taxation all be eliminated a follow

Were a reident of Romania derive in

ome or own
apital wi
, in
a

ordan
e wit te proviion of ti Convention, may be taxed in
Lituania, Romania all allow

 a a dedu
tion from te tax on te in
ome /
apital of tat reident,
an amount equal to te in
ome tax paid in Lituania

n te
ae of Lituania double taxation all be eliminated a follow

Were a reident of Lituania derive in

ome or own
apital wi
, in
a

ordan
e wit ti Convention, may be taxed in Romania, unle a more
favourable treatment i provided in it dometi
law, Lituania all allow

a a dedu
tion from te tax on te in
ome /
apital of tat
reident, an amount equal to te in
ome tax paid tereon in Romania
 ïhe Convention shall enter into force on the date of the later of the
(art 30 )

notifications indicating that the constitutional requirements for the entry

into force of this Convention in each Contracting State have been complied
with.

ïhis Convention shall remain in force until terminated by a Contracting

(art 31 )

State. Either Contracting State may terminate the Convention, through

diplomatic channels, by giving written notice of termination at least six
months before the end of any calendar year.
Funny tax picture
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