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Romania: Capital gains tax reporting

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Gabriela Bancescu

In response to proposals of the business environment aimed at making the Romanian capital market more attractive and to align with European Union requirements, Romania changed its main tax procedure legislation in June 2014. The changes are of relevance to residents in the EU, the European Economic Area or a country which is part of an international legal instrument signed by Romania for fiscal administrative cooperation, who are not obliged to appoint a Romanian tax agent to fulfill their tax reporting obligations, but may do so if they choose. This comes as an exception to the general rule requiring non-resident entities, irrespective of their country of residence, to appoint a tax agent in Romania to fulfill tax reporting obligations of the non-resident, including those arising from realising revenues from disposal of Romanian equities.

In July 2014, Romania deposited its instrument of ratification for the multilateral Convention on Mutual Administrative Assistance in Tax Matters (developed jointly by the OECD and the Council of Europe). The Convention and the amending protocol will enter into force for Romania in November 2014, three months after the instrument of ratification has been deposited. The exchange of information and the recovery of tax claims will be possible with countries/jurisdictions part of the Convention and the amending protocol (some of which have not yet concluded with Romania bilateral conventions for the avoidance of double taxation with respect to taxes on income and on capital).

Even though changes were brought to the tax procedure legislation, these do not provide tax exemptions and do not exonerate the non-resident from the tax compliance requirements in Romania.

The direct reporting procedures are not yet simplified and straightforward; however they also involve registration for tax purposes in Romania and submission of tax returns. One aspect to consider is that certain Romanian language documents would still need to be submitted hard-copy to the tax authorities in order to register for tax purposes and report the tax due; thus, from an administrative point of view, an external service provider may still need to be considered in case no appropriate internal resources are available at the level of the non-resident. Digital reporting, using a certified signature is also possible; nevertheless this may also require use of an external service provider.

Gabriela Bancescu (gabriela.bancescu@ro.ey.com)

EY

Tel: +40 21 402 4000

Website: www.ey.com/ro

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