Withholding tax on dividends in Romania

[European]

Hi all,
Romania has a withholding tax rate of 8% on dividends disbursed by a Romanian legal entity to non-(tax)resident individuals.
If the individual is a ta resident in the EU (not in Romania), can this 8% be claimed back from Romania?
Thanks

 

[TheCryptoAnt]

Hi all,
Romania has a withholding tax rate of 8% on dividends disbursed by a Romanian legal entity to non-(tax)resident individuals.
If the individual is a ta resident in the EU (not in Romania), can this 8% be claimed back from Romania?
Thanks

https://taxsummaries.pwc.com/romania/corporate/withholding-taxes

 

[European]

Thanks @TheCryptoAnt
I see that for Greece the rate under the treaty for dividends is 45%. Is that a typo? It's much lower for all other countries

 

[Roo]

@European in Romania you will probably get back nothing but tax credit from ANAF and I don't think they will allow you to claim back the 8%, then after dividends you will most probably be forced to pay healthcare and social security on your dividend income if it's above a minimum income threshold which is very low (unless laws changed recently). You can pay those at the minimum level ifI remember correctly but they still mean a few thousand euros per year.

 

[TheCryptoAnt]

Thanks @TheCryptoAnt
I see that for Greece the rate under the treaty for dividends is 45%. Is that a typo? It's much lower for all other countries

I doubt PWC has a typo in their website, but you can google the agreement itself and check.

 

[Marzio]

Is that a typo?

Not a typo

 

[European]

Not a typo

It's 20% then, not 45%
The PWC webpage talks about distributions by and WHT tax applied to Romanian resident companies (to non-resident entities)

 

[Marzio]

You should always cross check what PwC says with Deloitte's treaty tool.

I find it to be more precise for the available jurisdictions.

 

[European]

You should always cross check what PwC says with Deloitte's treaty tool.

I find it to be more precise for the available jurisdictions.

Yeah, it's 20% according to that tool

 

[Marzio]

Yeah, it's 20% according to that tool

I know, that's where the screenshot i posted here is coming from

 

[European]

I know, that's where the screenshot i posted here is coming from

So it is a typo then, in the initial PWC website

 

[JohnLocke]

It's 20% then, not 45%
The PWC webpage talks about distributions by and WHT tax applied to Romanian resident companies (to non-resident entities)

Maybe you should post the link to the PWC page, just to be fair.

 

[European]

Maybe you should post the link to the PWC page, just to be fair.

@TheCryptoAnt posted it at the beginning of the thread . Here it is again

https://taxsummaries.pwc.com/romania/corporate/withholding-taxes

 

[European]

How about setting up a company in another EU country that owns the Romanian company so that the Parent-Subsidiary Directive can be applied. This would prevent the WHT tax in Romania, correct?

 

[Marzio]

This would prevent the WHT tax in Romania, correct?

That's correct but you will have to create substance in Romania AKA hiring at least a director and renting an office to prevent the EU country where you are tax resident to claim that you are managing the RO company from there.

Since you mentioned Greece in your post, Greece could be a good option for an holding (if your RO company doesn't generate > 30% in passive income otherwise it will be considered a CFC) because there will not be any WHT tax in Romania and dividends are taxed only 5% in Greece when distributed to yourself.

Total tax 8%

Not bad at all.

 

[European]

@Marzio How do you come up with the 8%?
I understand it would be 6%:
- 1% corporate tax in Romania (in the best scenario, if the company qualifies as a micro company) plus then the
- 5% dividend tax in Greece when disbursing.

 

[Marzio]

1% corporate tax in Romania

https://www.linkedin.com/pulse/recent-law-update-romanian-micro-companies-nicholas-hammond-wpozf/

 

[European]

Thanks @Marzio
These guys keep changing the rules every year
So the tax is on revenue, not on profit??

 

[pixbix]

Thanks @Marzio
These guys keep changing the rules every year
So the tax is on revenue, not on profit??

Yes on total turn over, not on profit. Profit tax is 16%. also after a given sum you will also have to pay VAT, add 19% more.

 

[Marzio]

So the tax is on revenue, not on profit??

That's right