Dear client,

As already announced in info no. 2 send January 28th and published on our website, the Fiscal Code is consistently modified starting with February 1st 2013. Among the most important modifications we highlight the modification regarding the tax on income obtained by nonresidents which provides that all income obtained by non residents from services provided to Romanian companies is taxable regardless if provided in Romania or abroad, the only exception being the international transportation. The tax is 16%, or even 50% if the provider is a fiscal resident of a country that has procedure to exchange relevant information with Romania.

In conclusion, apart from consulting or management services that were taxable anyhow according to the former regulations, Romanian companies will pay income tax for all categories of services provided by nonresidents in Romania or abroad, among which: legal services, accommodation, restaurant services, local transportation, telecommunications, rent a car. We therefore recommend a deep analyzes of the travel expenses abroad. Buying specific services from Romanian travel agencies is a solution to the matter, as well as covering restaurant or transportation services form daily allowance, therefore not including those in expense reports. Of course Double taxation treaties are applicable and may avoid the fiscal consequences, but fiscal residency certificate translated in Romanian and certified by notary may be difficult to be obtained in case of occasional services, or cost might be higher than fiscal consequences in case of many services of low value.

Relevant people in the Ministry of Finances say that such consequence was not the purpose of the new regulation and new modification of law is now considered. Until such will happen we strongly recommend your full attention to such services.