Obligation of non-residents to register for tax purposes in Romania
Citeste varianta in limba romana

InfoTax no. 44, January 2014

In the past 2 years it has been intensively debated by the tax authorities and the business environment, the obligation of the non-residents to register for tax purposes in Romania due to their quality as tax payers “gained” as result of obtaining income from Romania. We mention that this tax registration was and is mandatory for all non-residents who obtain from Romania income which is subject to withholding tax in accordance with the Romanian law or the relevant Double Tax Treaty.  For the sake of clarity, the term ”income” includes mainly revenues from services, interest, royalty, dividends and commissions.

To that end, the tax authorities have amended even from the beginning of 2012 the “Informative return on the tax withheld and paid for the income subject to withholding tax/exempt income, for each non-resident beneficiary of income” that must be submitted by the Romanian income payers until the 28th of February of the current for the past year. The amendment of the return has targeted the insertion of the obligation to declare the tax identification code attributed by the Romanian tax authorities to the non-residents. Also, with a view to facilitate the administrative procedure of the non-residents’ registration, the tax authorities have introduced, also at the beginning of 2012, the option of the Romanian income payer to solicit from the tax authorities the issuance of the tax identification code for the non-resident tax payers.

Instead, the tax authorities have not drafted, until recently, the procedure for the implementation of such an option to register the non-resident at the request of the income payer, therefore the business environment has been confronted with the most burdening and obsolete administrative procedure of the non-residents’ direct registration in front of the Romanian tax authorities. Fortunately, the latter have realized the burden put on the non-residents’ shoulders and in February 2013 have issued a disposition giving the possibility to the Romanian income payers to submit the Informative return without filing in the tax identification code of the non-resident tax payers.

Nevertheless, the tax authorities have expressed in numerous occasions their opinion that the non-residents’ obligation to register is still binding and that they will implement the necessary procedures to “make acquaintance” with the non-resident tax payers. As such, in the Official Gazette no. 36/16.01.2014 was published Order no. 35/2014, that implements the procedure and the necessary forms so that the Romanian income payer may solicit to the tax authorities the issuance of the tax identification code for the non-resident tax payers. As stated by the new law, along with the standard form revealed by the Order, the income payer must submit documents proving its quality as payer of the income subject to withholding tax, but there are no details as regards these “proving documents”.

By issuance of this Order, the legal frame for the non-residents’ tax registration in Romania is today complete, so it is not to be expected that another waiver is passed by the tax authorities as regards this obligation, as it happened in the previous years. Under these circumstances, it is recommendable that the procedure for tax registration of the non-resident contractual partners who obtain income from Romania is commenced, so that until the 28th of February 2014 – the deadline for submission of the Informative return for 2013 – the tax identification code is attributed by the Romanian tax authorities.