Declaring withholding tax for nonresident’s incomes

The tax on the revenues obtained by nonresidents from a Romanian resident is withheld according to the general rule set by the Fiscal Code (chapter VI). The Conventions for avoidance of double taxation concluded with other states may provide a more favorable taxation or even exemption of such revenues.

The Romanian companies that make payments to the nonresidents are required to submit Return no 207 “Informative statement regarding the withholding tax / exempt revenues”. Exempt revenues will be included in this form. The deadline for submission is 28 February 2017 for the revenues paid in the year 2016.

Return no 207 includes the revenues paid to nonresidents, such as: dividends, interest, royalties, commissions, revenues from sport and entertainment, administrators’ remunerations, revenues for services rendered in Romania, revenues obtained from gambling, revenues from liquidation of a Romanian company or from transfer of fiduciary patrimony as well as revenues paid to nonresident individuals for prizes obtained in Romanian contests.

The requirement to declare such revenues is linked to another requirement established by the Fiscal Procedural Code – in force from 1 January 2016 – for the nonresidents obtaining revenues from Romanian residents. They must register for fiscal purposes in Romania via obtaining a Fiscal Identification Code. This code is necessary when filling in the return no 207.

The revenue payer (the Romanian entity) may request the fiscal authority, on behalf of the nonresident, to grant the Fiscal Identification Code. The request is made through form no 015. Details must be provided on the nature of the transaction between the resident and nonresident by submitting a copy of their contract or any other document that reflects the nature of the transaction/ revenue. Initially the fiscal authority requested a power of attorney from the nonresident, but this requirement was eliminated recently.

Considering the practical difficulties in obtaining the Fiscal Identification Code by the Romanian entities on behalf of the nonresidents, the form no 207 was amended with the purpose of allowing it to be submitted in the absence of the Fiscal Identification Code. Nevertheless the obligation to obtain a Fiscal Identification Code for the nonresident still exists. In the absence of such code the fiscal authority will not grant a confirmation of the tax withheld in Romania.

TPG offers assistance in obtaining Fiscal Identification Code for a nonresident with which Romanian entities have transactions in the scope of withholding tax.