The Ministry of Finance have recently issued a letter to the Local Tax Authorities that theoretically clarifies the tax status of expatriates working in Romania. Unfortunately, the actual method of payment of the tax liability is still not entirely clear.
The letter recognises that non-residents working in Romania are taxable from their first day in the country, subject to double tax treaty relief. According to most treaties an individual tax resident of the UK or the US (for example) would only be taxable in Romania if his stay exceeds 183 days in a calendar year (note that a number of treaties are currently under renegotiation and the 183 day rule could be restricted in future to comply with domestic legislation).
The letter confirms that the local firm is not directly responsible for deduction and payment of the tax relating to the foreigners working with their company. However, they are requested to inform the local tax authorities about the presence of such persons and the activity performed. They are also responsible for the "collection of the taxes and duties owed".
It should be the responsibility of the local tax office to establish the actual liability and the taxes are "to be paid in lei resulted from currency exchange at the official rate.in force on the date of payment."
It could be possible that the expatriates are required to remit the funds into the local company and the local company converts and pays the tax.
The above information is a short summary of recently published information and is not intended to be advise on any particular matter. Price Waterhouse expressly disclaims any responsibility to any person in respect of anything done in reliance of the contents of these publications.
Further information can be obtained from:
Ron Barden or Anca Troaca-Dragoman
Price Waterhouse Romania
Union International Center Etaj 3
Strada Ion Campineanu Nr 11
Bucharest 2 Romania
Telephone: 40 1 311 2455
Fax: 40 1 312 3334