Tax Treaty Relief in Romania

How does Romania's treaty network relieve double taxation?

Romania has concluded roughly 90 double-tax treaties (DTTs) -- known domestically as conventii de evitare a dublei impuneri -- administered by ANAF (Agentia Nationala de Administrare Fiscala) under Title VI and related provisions of Law 227/2015 on the Fiscal Code [1]. The network spans every EU member state, most OECD partners, and a broad range of emerging markets including China (3% dividend rate), India (10%), Saudi Arabia (5%), and the UAE (0-3%). Two new DTTs take effect from 1 January 2026: the Romania-United Kingdom treaty (dividends 5%, interest 3%, royalties 3%) and the Romania-Andorra treaty (dividends 0-5%, interest 3%, royalties 5%) [2]. Romania also holds three Tax Information Exchange Agreements (TIEAs) with Guernsey, the Isle of Man, and Jersey.

For Romanian residents receiving foreign-source income, the primary relief mechanism is the ordinary foreign tax credit under Articles 131 and 224 of the Fiscal Code [1]. The credit is calculated separately for each country and each category of income, and may not exceed the Romanian tax attributable to that income -- a per-country, per-income-category limitation. If the foreign rate exceeds Romania's domestic rate on the same income, the excess credit is forfeited; there is no carry-forward of unused credits. Documentation is mandatory: the taxpayer must show, via certificates from the foreign tax authority or the income payer, that the foreign tax was actually paid.

What are the domestic withholding rates and how do treaties reduce them?

For income paid to non-residents by Romanian payers, the domestic WHT rates under Title VI of the Fiscal Code are [3]:

• Dividends: 10% since 1 January 2025 (raised from 8% by Government Emergency Ordinance 156/2024; set to rise to 16% from 1 January 2026)
• Interest: 16%
• Royalties: 16%
• Management and consulting fees: 16%

A punitive 50% rate applies where income flows to a jurisdiction that has no information-exchange agreement with Romania and the transaction lacks economic substance.

Treaties reduce these rates substantially. The table below shows selected WHT ceilings under Romania's current treaty network (PwC Romania, 2026) [3]. Lower rates typically require a minimum shareholding (commonly 10% or 25%) held for a specified period:

How does the EU Parent-Subsidiary Directive overlay treaty rates?

Between EU group companies, the EU Parent-Subsidiary Directive (Council Directive 2011/96/EU), transposed into Article 229 of the Fiscal Code, can eliminate dividend withholding entirely -- regardless of the bilateral treaty rate [1]. For the exemption to apply:

1. The parent company must hold at least 10% of the Romanian subsidiary's capital;
2. The holding must have been maintained for an uninterrupted period of at least one year;
3. Both parent and subsidiary must qualify as EU companies under the Directive's Annex I (legal-form requirement);
4. The parent must present a valid certificate of fiscal residence and a declaration confirming compliance with the Directive conditions.

The EU Interest and Royalties Directive (Council Directive 2003/49/EC), transposed via Article 228 of the Fiscal Code, provides a parallel 0% WHT exemption on intra-EU interest and royalty flows where the payer and recipient are associated companies with at least 25% direct shareholding maintained for an uninterrupted period of at least two years [1]. Both directives require a compliance declaration alongside the fiscal residence certificate.

What is the residence tie-breaker for dual-resident cases?

Where an individual qualifies as resident in both Romania and a treaty partner under each country's domestic rules, Romania's DTTs follow the OECD Model Article 4 tie-breaker cascade [3]:

1. Permanent home: the state where the individual has a permanent home available;
2. Centre of vital interests: if permanent homes exist in both states, the state with which personal and economic relations are closer (family, employer, social life);
3. Habitual abode: if the centre cannot be determined, the state where the individual habitually abides;
4. Nationality: if the individual is a national of only one state, that state;
5. Mutual agreement (MAP): if none of the above resolves the question, the competent authorities settle by mutual agreement.

For legal entities (companies), older Romanian treaties use place of effective management (POEM) as the tie-breaker under Article 4(3) of the OECD Model. The MLI Article 4 option, adopted by Romania, replaces POEM with a mutual agreement procedure for covered treaties -- dual-resident companies must apply to both competent authorities for resolution rather than relying on the automatic POEM test [4].

Domestic Romanian residency for legal persons is based on registered office or place of effective management under Article 7 of the Fiscal Code. Where a dual-residency dispute arises, ANAF engages through the MAP mechanism.

How does the BEPS Multilateral Instrument modify Romanian treaties?

Romania deposited its MLI ratification instrument on 28 February 2022; the MLI entered into force for Romania on 1 June 2022 [4]. The MLI modifies each "covered tax agreement" bilaterally -- meaning the modification applies only if both contracting states have nominated that treaty as a covered agreement and have adopted compatible options.

Romania's key MLI positions include:

• Principal Purpose Test (PPT) under MLI Article 7, paragraph 1: Romania adopted the PPT as the standard anti-abuse mechanism. Under the PPT, a treaty benefit is denied if one of the principal purposes of an arrangement or transaction was to obtain that benefit, unless granting the benefit would be in accordance with the object and purpose of the treaty provision. ANAF publishes synthesised texts for covered treaties on its official website.
• Modified PE definition under MLI Articles 12-15: Romania opted in, extending permanent establishment scope to commissionaire arrangements that previously escaped the dependent-agent test.
• Improved MAP under MLI Articles 16-17: Romania adopted the mandatory MAP provision and best-effort MAP obligation.

For the PPT, practitioners must be able to demonstrate substantive non-tax commercial reasons for any cross-border structure claiming treaty relief. ANAF can challenge arrangements -- even those technically compliant with treaty wording -- if obtaining the WHT reduction was a principal purpose. This mirrors the domestic GAAR in Article 11 of the Fiscal Code.

How is the certificate of fiscal residence obtained?

Non-resident payees wishing to access a reduced treaty rate (or EU Directive exemption) on Romanian-source income must present a valid certificate of fiscal residence (certificat de rezidenta fiscala) issued by their home tax authority, confirming they are resident in the treaty-partner state in the relevant fiscal year [5].

For Romanian-source income, the procedure at the withholding-agent (Romanian payer) level is:

1. The non-resident provides the certificate before payment or within a reasonable period following payment (specific deadlines vary by treaty);
2. The Romanian payer withholds at the reduced treaty rate and reports monthly using Form D100 and annually using Form D207 (non-resident income declaration);
3. If full domestic WHT was withheld initially, the non-resident may file a refund claim with the ANAF office of the withholding agent, attaching the certificate and a beneficial-ownership declaration.

For outbound income (Romanian residents receiving foreign-source income), ANAF issues Romanian certificates of fiscal residence confirming Article 7 Fiscal Code residency. Applications are submitted via the ANAF Virtual Private Space (Spatiul Privat Virtual -- SPV) portal at anaf.ro, or in paper to the territorially competent ANAF office. Processing takes approximately 15-30 days. The certificate enables foreign withholding agents to apply the reduced Romanian-treaty rate at source [5].

For context on how Romanian tax residency itself is established -- the prerequisite for claiming treaty benefits as a Romanian outbound -- see the Romania country overview. The Romania expat tax residency crossover covers the Article 7 Fiscal Code triggers and the tie-breaker procedures in detail.

Cross-border arrangements involving Romanian WHT reduction claims are fact-specific and depend on treaty wording, MLI overlay status for the relevant partner, shareholding structure, and beneficial-ownership analysis. A qualified tax professional should be consulted before relying on a reduced rate or directive exemption.