With the publication of Law No. 78 of 2017 in the Official Gazette on June 9, 2017, the convention against double taxation in tax matters concluded between the Italian Republic and Romania was ratified.
Law No. 78/2017 was published in the Official Gazette on June 9, 2017, ratifying the convention against double taxation with regard to income taxes concluded between Italy andRomania. The convention also contains some measures aimed at preventing the phenomenon of tax evasion and avoidance. The ratification law has been in force since June 10, 2017.
As far as Italy is concerned, the convention applies in relation to:
– IRPEF;
– IRES;
– IRAP.
With reference to Romania, however, the convention covers:
– income tax;
– profit tax.
There are different individual provisions that clarify what tax treatment should be given to the various types of income received by various actors (real estate income, business profits, dividends, income from self-employment, income from employment, etc.).
By way of example, with regard to real estate income, the convention stipulates that if a person resident in one of the states under consideration receives income from real estate located in the other contracting state, such income is taxable in the latter state.
With reference to income derived from the exercise of self-employment, the same is taxable only in the state of residence of the person who receives it, unless the resident person also has a fixed base in the other contracting state, on a habitual basis, for the purpose of exercising the activity. In such a case, the income is to be taxed in the other state, but only for the portion attributable to the said fixed base.
Not only that.
The convention signed between Italy and Romania also regulates the exchange of information between the two states.
They will proceed with the exchange of information presumably relevant to the application of the various provisions of the Convention, as well as to prevent the phenomena of tax evasion and avoidance.
Information received from a state party shall be kept secret and disclosed only to persons or authorities responsible for the assessment or collection of taxes, as well as proceedings concerning such taxes, or decisions concerning appeals filed for such taxes.
