The Executive approved in Wednesday's meeting, under a memorandum, the signing of a convention between Romania and the Principality of Liechtenstein for the elimination of double taxation with regard to income and capital taxes and the prevention of fiscal evasion and the avoidance of paying taxes and of the protocol attached to the convention.
According to a Government release, the normative act provides for the expansion of cooperation between Romania and the Principality of Liechtenstein in the fiscal area by concluding a convention on the elimination of double taxation with regard to income and capital taxes.
"In order to promote and stimulate investments and financing between the two states, the tax rates for incomes that are taxed by withholding tax at the source (dividends, interest, royalties) were set at lower rates than the two states, respectively 5% for interest and royalties, in the context in which, in Liechtenstein, the withheld tax rate for these revenues is zero. Regarding the payment of dividends, at the request of the authorities of the two states and considering that there are companies from the Principality present in Romania, the dividends paid by a resident company of a contracting state to a resident company of the other contracting state shall be exempt from tax in the state from which they originate," the press release reads, told Agerpres.
At the same time, the profits made from construction projects will be taxed in the state where the activity is carried out, only if this activity is carried out for a period longer than 12 months.
Also, the profits made by an enterprise of a contracting state from the operation of ships or aircraft in international traffic will be taxable only in that state.
According to the cited source, this convention also regulates the taxation of capital, income in the form of salaries and pensions, income obtained by students, practitioners, performing artists and athletes, as well as income obtained from capitalisation.
The document also regulates aspects related to the exchange of information, the methods of eliminating double taxation, non-discrimination, the amicable procedure, the entry into force and the termination of the validity of the convention.
The convention applies to residents of one or both states.
"The conclusion of a convention to avoid double taxation between Romania and the Principality of Liechtenstein would complete the current bilateral legal framework and lead, at the same time, to the development of economic cooperation, as well as to the intensification and diversification of commercial, technical-scientific and cultural exchanges between the two countries," the press release mentions.
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