What is the importance of establishing your tax residency?
Tax residency is an important concept in Romanian tax legislation, like it is in many other countries, as well. This concept is used to determine the individual’s tax obligations. Depending on the tax residency (whether the person is considered a tax resident or non-resident), the individual can be a subject to taxation in Romania in many different ways.
What are the main elements taken into consideration?
- if the person is present in Romania for a period or more periods exceeding, in total, 183 days, during any interval of 12 consecutive months, which ends in the calendar year concerned;
- if the person has his domicile in Romania;
- if the person has a permanent residence in Romania, owned, rented or which remains available at any time for the individual and / or for his family (commodatum agreement);
- if the center of the person’s vital interests is located in Romania;
- if the person has a vehicle registered in Romania or in a foreign state;
- if the person has a driving licence issued by the competent authority from Romania or from the foreign state;
- if the person is insured with the social insurance system in Romania or in the foreign state;
- if the person has a passport issued by the competent authority in Romania or in a foreign state.
What is the convention against taxation?
The individual can be considered a resident having the fiscal domicile only in the state in which he/she has a registered residence, respectively a dwelling that is permanently at his disposal. If the person owns 2 permanent homes both in Romania and in the foreign state, then the place taken into account is where the person has his center of vital interests. Law 227/2015 defines the center of interests as the place where the personal and economic relations of the individual are stronger.
Regarding the personal relationships, the most important ones are the family of the spouse, child / children, dependents who arrive in Romania together with the person, membership in a charitable, religious organization, participation in cultural or other activities. Regarding the economic relations, there are some important exemples, like being employed in a Romanian company, if he is involved in a business activity in Romania, if he owns real estate in Romania, bank accounts in Romania, credit / debit cards at banks in Romania etc.
What are the necessary documents?
- the questionnaire for establishing the tax residence of individuals upon arrival in Romania which can be found on the ANAF website (individuals arriving in Romania and staying for a period or more periods exceeding a total of 183 days, during about 12 months consecutive, ending in the calendar year concerned);
- copy of valid passport;
- copy of the identity card / permanent residence card / residence permit / tax registration certificate;
- documents attesting the existence of a dwelling of the person in Romania, a dwelling that can be rented or owned or is always available to the person;
- as the case may be, the tax residence certificate issued by the competent authority of the foreign state with which Romania has signed the double taxation agreement or another document issued by another authority with responsibilities in the field of tax residence certification (copy or original , together with an authorized translation into Romanian);
- an act issued by the competent authority of the foreign state proving the fact that the person is removed from the fiscal records (and also an authorized translation into Romanian);
- any document proving that the individual has his center of vital interests in Romania.
Exceptions to the obligation to submit the questionnaire:
- foreign citizens with diplomatic or consular status in Romania;
- foreign citizens who are officials or employees of an international organization registered in Romania;
- foreign citizens who are officials or employees of a foreign state in Romania;
- family members of the above, in compliance with the rules of international law.
To remember! Not filing the questionnaire for establishing the residence of the person on time is a contravention, which is sanctioned with a fine from 50 to 100 lei (non-resident individuals must register the questionnaire at the competent authority within 30 days of the 183 days of presence in Romania) and the possibility of retroactively setting taxes, along with interest and penalties.
Legal Intern R&R Partners Bucharest
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