Double Tax Treaty between Luxembourg & Romania | Damalion

CONVENTION

BETWEEN THE GRAND DUCHY OF LUXEMBOURG AND ROMANIA  FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL TAX EVASION WITH REGARD TO TAXES ON INCOME AND ON CAPITAL

 

The Government of the Grand Duchy of Luxembourg and the Government of Romania, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital. 

Have agreed as follows:

Article 1

Persons Covered

This Convention shall apply to persons who are residents of one or both of the Contracting States.

 

Article 2

Taxes Covered

  1. This Convention shall apply to taxes on income and on capital imposed on behalf of each of the Contracting States, of their territorial administrative units or of their local authorities, irrespective of the system of local authorities, irrespective of the system of collection.
  1. Taxes on income and on capital shall be deemed to be taxes imposed on total income, on total capital, or on total wealth, or on items of income or wealth, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital gains.
  1. The existing taxes to which the Convention shall apply are

(a) in the case of Luxembourg:

(i) the personal income tax; 

(ii) the corporate income tax

(iii) the special tax on directors’ fees; 

(iv) the tax on wealth; and

(v) the municipal business tax based on operating profit and capital

(hereinafter referred to as “Luxembourg tax”).

(b) in respect of Romania:

(i) the personal income tax; 

(ii) the profit tax;

(iii) the payroll tax

(iv) the non-resident income tax; 

(v) the dividend tax; and

(vi) the tax on agricultural income of natural persons

(hereinafter referred to as “Romanian tax”).

  1. The Convention shall also apply to any identical or substantially similar taxes imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes in their respective taxation laws.

 

Article 3

General Definitions

  1. For the purposes of this Convention, unless the context otherwise requires

(a) the terms “a Contracting State” and “the other Contracting State” mean, as the context requires, Luxembourg or Romania

(b) “Luxembourg” means the Grand Duchy of Luxembourg and, when used in a geographical sense, means the territory of the Grand Duchy of Luxembourg;

(c) “Romania” means Romania and, when used in a geographical sense, means the territory of Romania, including its territorial sea international law for the purpose of exploration and exploitation of natural resources,

(d) the term “person” includes natural persons, companies and any other bodies of persons lawfully constituted in either Contracting State

(e) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes

(f) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State by a resident of the other Contracting State;

(g) the term “international traffic” means any transport by a ship, aircraft, railway or road vehicle operated by an enterprise whose place of effective management is in a Contracting State, except where the ship, aircraft, railway or road vehicle is operated only between points in a Contracting State where the place of effective management is in a Contracting State between points in the other Contracting State;

(h) the term “competent authority” means:

(i) in relation to Luxembourg, the Minister of Finance or his authorized representative;

(ii) in relation to Romania, the Minister of Finance or his authorized representative;

(i) “nationals” means:

(i) all natural persons who are nationals of Luxembourg or citizens of Romania;

(ii) all legal persons, partnerships or associations formed in accordance with the laws in force in a Contracting State.

  1. For the purposes of the application of the Convention by a Contracting State, any term not defined therein shall have the meaning which it has under the law of that State concerning the taxes to which the Convention applies, unless the context otherwise requires.

Article 4

Resident

  1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax in that State by reason of his domicile, residence, place of management or any other criterion of a similar nature. However, this term shall not include any person who is subject to tax in that State in respect only of income from sources in that State or on capital situated therein.
  1. Where under the provisions of paragraph 1 an individual is a resident of both Contracting States, his status shall be determined in the following manner:

(a) such person shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States he shall be deemed to be a resident of the State with which he has a permanent home available to him resident of the State with which his personal and economic relations are closer (center of vital interests);

(b) if the State in which such person has his centre of vital interests cannot be determined, or if he does not have a permanent home in any of the States, he shall be deemed to be a resident of the State where he has an habitual abode

(c) if such person has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national or citizen

(d) if such person has the nationality or citizenship of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

  1. Where, under the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, he shall be deemed to be a resident of the State in which his place of effective management is situated.

 

Article 5

Permanent Establishment

  1. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
  1. The term “permanent establishment” includes in particular:

(a) a place of management,

(b) a branch office

(c) an office,

(d) a factory,

(e) a workshop,

(f) a sales outlet,

(g) a plantation, farm or vineyard, and

(h) a mine, oil or gas well, quarry or other place of extraction of natural resources.

  1. The term “permanent establishment” shall also include a construction or assembly site activities carried on therein, but only where such sites or activities have a duration of more than nine months.
  1. Notwithstanding the foregoing provisions of this Article, the term “permanent establishment” shall be deemed not to include permanent establishment” if:

(a) use is made of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) goods or merchandise belonging to the enterprise are stored for the sole purpose of storage, display or delivery

(c) goods belonging to the enterprise are stored solely for the purpose of processing by another enterprise;

(d) a fixed place of business is used solely for the purpose of purchasing goods or gathering information for the enterprise;

(e) a fixed place of business is used solely for the purpose of carrying on any other activity of a preparatory or auxiliary character for the enterprise

(f) goods belonging to the enterprise, exhibited at a trade fair or exhibition, are sold by the enterprise at the end of such fair or exhibition

(g) a fixed place of business is used solely for the purpose of carrying on the activities mentioned in subparagraphs (a) to (f), provided that the overall activity of the fixed place of business resulting from such combination activity of the fixed place of business resulting from such combination is of a preparatory or auxiliary nature.

  1. Notwithstanding the provisions of paragraphs 1 and 2, where a person — other than an agent with independent status to which paragraph 6 applies – acts on behalf of an enterprise and has powers in a Contracting State that in a Contracting State and has and habitually exercises in that State an authority to conclude contracts enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of State in respect of all activities which that person undertakes for the enterprise, unless the activities of that person are limited to those referred to in paragraph 4 which, if exercised through a which, if exercised through a fixed place of business, would not enable that fixed place of business to be regarded as a permanent establishment under the provisions of that paragraph.
  1. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely by reason of the the sole fact that it carries on business in that State through a broker, general commission agent or any other agent having agent of an independent status, provided that such persons are acting in the ordinary course of their ordinary course of business.
  1. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself be sufficient to make any such company a permanent company a permanent establishment of the other.

Article 6

Income from real property

  1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
  1. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agricultural and forestry holdings, rights to which the provisions of private law concerning land ownership property, the usufruct of real estate and the rights to variable or fixed payments for the operation or rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, springs and other natural resources; ships, aircraft, railway or road vehicles, and boats are not considered as real ships, aircraft, railway or road vehicles, and boats are not considered as real estate.
  1. The provisions of paragraph 1 shall apply to income derived from the direct operation, rental or leasing, or any other form of operation of real property.
  1. The provisions of paragraphs 1 and 3 shall also apply to income from the real property of an property of an enterprise as well as to income from real estate used for the exercise of a independent profession.

 

Article 7

Business Profits

  1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business in such a manner, the profits of the enterprise may be profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
  1. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall be attributed in each Contracting State the profits which it might be expected to make if it were a separate enterprise carrying on business in the other Contracting State shall in each Contracting State be attributed to that permanent establishment the same or similar activities under the same or similar conditions and dealing at arm’s length with the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
  1. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses made for the purposes of that permanent establishment, including executive and general administrative expenses the cost of the services rendered by the enterprise of which the permanent establishment is a part, or the cost of the services rendered by the enterprise of which the permanent establishment is a part, shall be deducted.
  1. If it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of an on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall prevent such provision of paragraph 2 shall not prevent that Contracting State from determining the taxable profits according to the the apportionment in use; the method of apportionment adopted shall, however, be such that the result obtained in accordance with the principles contained in this Article.
  1. No profit shall be attributed to a permanent establishment by reason of its having merely purchased goods for the enterprise.
  1. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined the same method each year, unless there are good and sufficient reasons for proceeding otherwise.
  1. Where profits include items of income which are dealt with separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.

 

Article 8

International Transport

  1. 1. Profits from the operation of ships, aircraft or railway or road vehicles shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
  1. Profits from the operation of inland waterway vessels shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
  1. If the place of effective management of a maritime or inland navigation enterprise is on board a ship or boat, that place of effective management shall be considered to be the place of effective management of the enterprise. ship or boat, that place of business shall be deemed to be in the Contracting State in which the home port of that ship or boat is situated of that ship or boat, or, if there is no home port, in the Contracting State of which the operator of the ship or boat is a resident.
  1. The provisions of paragraph 1 shall also apply to profits derived from participation in a pool, a joint business or an international operating agency.

Article 9

Associated enterprises

  1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and of an enterprise of the other Contracting State, and that, in either case, the two enterprises are, in their commercial or financial relations bound by conditions agreed upon or imposed which differ from those which would be agreed upon between independent the profits which, without these conditions, would have been made by one of the enterprises but could not be but for those conditions could not in fact have been realized by one of the enterprises, may be included in the profits of that enterprise and taxed accordingly.

  1. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an profits on which an enterprise of the other Contracting State has been taxed in that other State and the profits so other State, and the profits so included are profits that would have accrued to the enterprise of the first-mentioned State if the conditions agreed upon between State if the conditions agreed upon between the two enterprises had been those which would have been between independent enterprises, the other State shall make an appropriate adjustment to the amount of the tax imposed therein on such profits. In determining such adjustment, due regard shall be given to the other provisions of provisions of this Convention and, if necessary, the competent authorities of the Contracting States shall consult each other. Contracting States shall consult each other.

Article 10

Dividends

  1. Dividends paid by a company that is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
  1. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the person receiving the dividends is the beneficial owner thereof, the tax so charged shall not exceed

(a) 5 percent of the gross amount of the dividends if the beneficial owner is a corporation (other than a partnership) that directly owns at least 25 per cent of the capital of the corporation paying the dividends

(b) 15 percent of the gross amount of the dividends, in all other cases. This paragraph shall not affect the taxation of the corporation in respect of the profits out of which the dividends are payment of dividends.

  1. The term “dividends” as used in this article means income from shares, shares or profit sharing certificates, mining shares, founders’ shares or other profit shares, except for receivables, and income from other shares which is subject to the same tax regime as income from shares under the legislation of the State of which the distributing company is a resident.
  1. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the company paying the dividends is a resident, carries on business in the other Contracting State through a permanent establishment situated therein, or performing independent personal services from a fixed base situated therein, and that the holding in respect of which the dividends are paid is effectively connected with it. In such a case, the provisions of Article 7 or Article 15, as the case may be, shall apply.
  1. Where a company that is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on dividends paid by the company, except to the extent that such dividends are paid to a resident of that other State or to the extent the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a the company, except to the extent that such dividends are paid to a resident of that other State or to the extent that the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor shall it impose any tax on the undistributed distributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of the company shall not be liable to any tax on the undistributed profits of the company, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

 

Article 11

Interest

  1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxable in that other State.
  1. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient of the interest is a resident of that State, the interest may be taxed in that State the laws of that State, but if the person receiving the interest is the beneficial owner thereof, the tax so charged shall not exceed 10 percent of the shall not exceed 10 percent of the gross amount of the interest.
  1. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to resident of the other Contracting State shall not be taxable in the first-mentioned State if the debt-claim in respect of which the interest is paid is guaranteed, insured or financed by the other State or by a financial institution that is a resident of that other State.
  1. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage or by a participation in the debtor’s profits, and includes income from government securities and income from bonds or debentures, including premiums and prizes attached to such securities. Penalties for late payment shall not be considered as interest within the meaning in this section.
  1. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, a business activity through an establishment situated therein, or situated therein, or performs in the other Contracting State in which the interest arises independent personal services from a fixed base situated therein, and the debt-claim is effectively connected with it. In this case, the provisions of Article 7 or Article 15, as the case may be, shall apply.
  1. Interest shall be deemed to arise in a Contracting State when the debtor is that State, a itself, a territorial unit, a local authority or a resident of that State. However, where the payer of the interest, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed base in a Contracting State in connection with which the indebtedness on which the interest is paid was incurred and which the indebtedness giving rise to the interest was incurred and which bears the expense of that interest, such interest shall be deemed to arise in the State in which the State in which the permanent establishment or fixed base is situated.
  1. Where, by reason of a special relationship between the payer and the beneficial owner or where both maintain beneficial owner, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount of the for which it is paid, exceeds that which would have been agreed upon by the debtor and the beneficial owner In the absence of such relationship, the provisions of this article shall apply only to the latter amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being due to the other provisions of this Convention.

 

Article 12

Royalties

  1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
  1. However, such royalties may also be taxed in the Contracting State in which they arise and according to of that State, but if the person receiving the royalties is the beneficial owner thereof, the tax so charged shall not exceed 10 percent of the so assessed shall not exceed 10 percent of the gross amount of the royalties.
  1. The term “royalties” as used in this Article means remuneration of any kind paid for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films, films and recordings for radio and television transmissions radio and television broadcasts, as well as any other form of transmission, a patent, a trademark, a design, plan, secret formula or process, as well as for the use or disclosure of any of the above-mentioned the use of, or the right to use, industrial, agricultural, commercial or scientific equipment, and scientific equipment and for information relating to experience acquired in the industrial, commercial or scientific experience.
  1. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of the royalties resident of a Contracting State carries on business in the other Contracting State in which the royalties arise, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein, or performing independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with it. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply.
  1. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a territorial unit of government, a local authority or a resident of that State. However, where the payer of the royalties, whether or not a resident of a Contracting State, has in a Contracting State has a permanent establishment or a fixed base in that State in connection with which the contract for the payment of royalties have been made and which bears the expense thereof, such royalties shall be deemed to arise in the State in which arising in the State in which the permanent establishment or fixed base is situated.
  2. Where, by reason of a special relationship between the payer and the beneficial owner or where both maintain beneficial owner, the amount of the royalties, having regard to the service for which they are paid, exceeds the amount that would have been agreed upon by the debtor and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the latter amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to other provisions of this Convention.

 

Article 13

Commissions

  1. Commissions arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
  1. However, such commissions may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the person who receives the commission is the beneficial owner thereof, the tax so charged shall not exceed 5 percent of the gross amount of the commissions.
  1. The term “commissions” as used in this section means remuneration paid to any person for person for services rendered by him as an intermediary, general commission agent, or any other person treated as an intermediary or commission agent by the tax law of the State in which the remuneration arises.
  1. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of the commissions resident of a Contracting State carries on business in the other Contracting State in which the remuneration arises commissions, carries on business in the other Contracting State in which the commissions arise through a permanent establishment business through a permanent establishment situated therein, or performs in the other Contracting State professional services from a fixed base situated therein, and the commissions are effectively connected therewith. the commissions are effectively connected with it. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply.
  1. Commissions shall be deemed to arise in a Contracting State when the payer is that State itself, a territorial unit of government, a local authority or a resident of that State. However, where the person paying the commission, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment or a branch office, the commission shall be deemed to have been paid to him. State a permanent establishment or a fixed base in respect of which the obligation to pay the commission has been incurred and which bears the expense of such commissions, such commissions shall be deemed to arise the State in which the permanent establishment or fixed base is situated.
  1. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and third persons, the amount of the commission, taking into account the services for which they are paid exceeds that which would have been agreed upon by the debtor and the beneficial the absence of such a relationship, the provisions of this section shall apply only to the latter amount. In such a case, the excess part of the commissions shall remain taxable according to the laws of each Contracting State, taking into account the other provisions of this Convention.

 

Article 14

Capital Gains

  1. Gains derived by a resident of a Contracting State from the alienation of real property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
  1. Gains from the alienation of movable property forming part of the business property of a permanent establishment that an enterprise of a Contracting State has in the other Contracting State, or of movable property that belongs to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such permanent establishment (alone or with the whole enterprise) or fixed base, may be taxed in that other State.
  1. Gains from the alienation of ships, aircraft, railway or road vehicles operated in international traffic operated in international traffic, inland waterway vessels or movable property the operation of such ships, aircraft, railway or road vehicles, or vessels shall be taxable only in The taxable income of a company shall be taxed only in the Contracting State in which its place of effective management is situated.
  1. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the transferor is a resident.

 

Article 15

Independent Personal Services

  1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in the Contracting State of which the transferor is a resident. activities of an independent character shall be taxable only in that State unless the resident has a habitual place of business in the other resident has a fixed base in the other Contracting State for the purpose of performing his activities. If he has such a fixed base If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base.
  1. The term “professional services” includes, in particular, independent activities of a scientific, literary, artistic educational or teaching activities, as well as the independent activities of doctors, lawyers, engineers, architects, dentists and accountants.

 

Article 16

Dependent Professions

  1. Subject to the provisions of Articles 17, 19, 20, 21 and 22, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is exercised in the other Contracting State, remuneration derived in respect thereof may be taxed in that other State.
  1. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the taxable year concerned, and

(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer is in another State.

  1. Notwithstanding the foregoing provisions of this Article, remuneration received in respect of an employment exercised on board a ship, aircraft, railway or road vehicle operated in international traffic or on board a vessel used for navigation inland navigation, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

 

Article 17

Directors’ fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State resident of the other Contracting State may be taxed in that other State.

 

Article 18

Artists and Athletes

  1. Notwithstanding the provisions of Articles 15 and 16, income derived by a resident of a Contracting State from his personal activities as an entertainer, such as a theatre, motion picture, film or video artist, in the other Contracting State artist, such as a theater, motion picture, radio or television artiste, or a musician, or as an athlete, may be taxed in that other State. 
  1. Where income from activities which an entertainer or sports person performs personally and in that capacity is attributed not to the artist or sportsman himself but to another person, such income may be taxed, notwithstanding the notwithstanding the provisions of Articles 7, 15 and 16, such income may be taxed in the Contracting State in which the activities of the artist or sportsman are carried on.
  1. Notwithstanding the provisions of paragraphs 1 and 2, income derived from activities exercised by entertainers or athletes who are residents of a Contracting State shall be taxable only in that State when the activities are in that State, if the activities are exercised in the other Contracting State in the framework of cultural or sporting exchanges approved by the Governments of the Contracting States.

 

Article 19

Pensions

  1. 1. Subject to the provisions of paragraph 2 of Article 20, pensions and other similar remuneration paid to a resident or paid to a resident of a Contracting State in respect of past employment shall be taxable only in that State.
  1. Notwithstanding the provisions of paragraph 1, pensions and other amounts paid under the social security legislation of a Contracting State may be taxed in that State.

 

Article 20

Public Offices

  1. (a) Remuneration, other than a pension, paid by a Contracting State or a territorial unit or local authority thereof to an individual in respect of services rendered to that State or unit or authority shall be taxable only in that State.

(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i) is a national or a citizen of that State Or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

  1. (a) Pensions paid by a Contracting State or a territorial unit of government or a local authority thereof, either directly or out of funds constituted by them, to an individual in respect of services rendered by that individual, shall be deemed to be paid to the individual. an individual in respect of services rendered to that State or unit or local authority shall be taxable only in that State.

(b) However, such pensions shall be taxable only in the other Contracting State if the individual is a resident of that State and is a national or a citizen thereof.

  1. The provisions of Articles 16, 17 and 19 shall apply to remuneration and pensions paid in respect of services rendered in connection with a business carried on by a Contracting State or one of its State or one of its territorial administrative units or local authorities.

 

Article 21

Students and Trainees

  1. 1. Amounts paid to a student or a trainee who is, or immediately before visiting a Contracting State was State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of education or training, receives to defray the expenses of his maintenance, education or training shall not be taxable in that the amount of the maintenance, education, or training payments received by a resident of the other Contracting State for the sole purpose of pursuing his education or training in the first-mentioned State shall not be taxable in that State.
  1. An individual who is or was a resident of one of the Contracting States and who is present in the other Contracting State for the purpose of pursuing education, research or training, or to acquire technical, professional or business training or experience and who is employed in that other Contracting State in that other Contracting State for a period or periods not exceeding two years in the aggregate shall be years in the aggregate shall be exempt from tax in that other State in respect of remuneration if such employment is directly related to his or her studies, research, training or experience and if the remuneration experience and if the remuneration constitutes the income necessary to cover his maintenance expenses.

Article 22

Professors and researchers

 

  1. 1. Remuneration of any kind for professors and other members of the teaching staff, of one of the contracting States who are temporarily present in the other contracting State for the purpose of teaching or scientific research for a period not exceeding two years at a university or other officially recognized educational institution, shall be taxable only in the the first-mentioned State; after that period the remuneration shall be taxable only in the other State.
  1. This provision shall also apply to remuneration derived by an individual who is a resident of a Contracting State in respect of research and development work carried out in the other Contracting State, if such work is not undertaken primarily for the purpose of securing a special benefiting an enterprise or person, but in the public interest.

 

Article 23

Other Income

  1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this the preceding Articles of this Convention shall be taxable only in that State.
  1. The provisions of paragraph 1 shall not apply to income other than income from property as defined in paragraph 2 of Article 6, where the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State, either in industry business through a permanent establishment situated therein, or performing independent personal services from a fixed by means of a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with it. In such a case, the provisions of Article 7 or Article 15, as the case may be, shall apply.

 

Article 24

Assets

  1. Capital represented by immovable property referred to in Article 6 owned by a resident of a Contracting State and situated in the other Contracting State may be taxed in that other State.
  1. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, or by movable property pertaining to a fixed base of which a resident belongs to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State.
  1. Capital represented by ships, aircraft, railway and road vehicles operated in international traffic, by vessels used for in international traffic, ships used for inland navigation, and movable property used in the operation of such ships the operation of such ships, aircraft, railway or road vehicles, or vessels, shall be taxable only in The taxable income of a company shall be taxed only in the Contracting State in which its place of effective management is situated.
  1. All other elements of capital of a resident of a Contracting State shall be taxable only in that that State.

 

Article 25

Methods for Eliminating Double Taxation

  1. In Luxembourg, double taxation shall be avoided in the following manner:

(a) Where a resident of Luxembourg derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Romania, Luxembourg shall exempt such income or capital from tax, subject to the provisions of subparagraphs (b) and (c), but may, in calculating the amount of tax on the remainder of the income or capital of the resident, apply the same rates of tax as if the same rates of tax as if the income or capital had not been exempted.

(b) Where a resident of Luxembourg receives items of income which, in accordance with the provisions of Articles 10, 11, 12 and 13, may be taxed in Romania, Luxembourg shall allow a deduction from the tax it levies on the income of that resident in an amount equal to the tax paid in Romania. This deduction may not, however, exceed the fraction of the tax, calculated before deduction, corresponding to

  1. c) Where a company that is a resident of Luxembourg receives dividends from Romanian sources, Luxembourg shall exempt such dividends from taxation, provided that such company that is a resident of Luxembourg has directly held since the beginning of its operating year at least 25 per cent of the capital of the company paying the dividends. of the capital of the company paying the dividends. The above-mentioned shares of the Romanian company are, under the same conditions, exempt from Luxembourg wealth tax.
  1. In Romania, double taxation is avoided as follows

(a) Where a resident of Romania derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Luxembourg, Romania shall, subject to the provisions of subparagraph (b), exempt such income or capital from tax, but may

(b) Where a resident of Romania receives items of income which, in accordance with the provisions of Articles 10, 11, 12 and 13, may be taxed in Luxembourg, Romania shall allow a deduction from the tax it levies on the income of that resident of an amount equal to the tax paid in Luxembourg. This deduction may not, however, exceed the fraction of the tax, calculated before deduction, corresponding to such items of income received from Luxembourg.

 

Article 26

Non-discrimination

  1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than those to which nationals of that other State in the same situation are or may be subjected. This provision shall apply Notwithstanding the provisions of Article 1, this provision shall also apply to persons who are not residents of one or both Contracting States or of both Contracting States.
  1. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably assessed in that other State than the taxation of enterprises of that other enterprises of that other State carrying on the same activities. This provision shall not be construed This provision shall not be construed to require a Contracting State to grant to residents of the other Contracting personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities to its own residents.
  1. Unless the provisions of article 9, paragraph 1, article 11, paragraph 7, article 12, paragraph 6, article 13, paragraph 6, are applicable, interest, royalties, commissions and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, in determining the taxable profits of that enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of that enterprise, be deductible under the same conditions as if they had been contracted with a resident of the first-mentioned State.
  1. Enterprises of a Contracting State, the capital of which is wholly or partly, directly or indirectly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subject in the first-mentioned State to any tax or duty thereon which other or more burdensome than those to which other similar enterprises of the first-mentioned State are or may be other similar enterprises of the first-mentioned State.
  1. The provisions of this Article shall apply, notwithstanding the provisions of Article 2, to taxes of every kind and description or denomination.

 

Article 27

Mutual Agreement Procedure

  1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, submit his case to the competent authority of which it is a resident or, if its case comes under paragraph 1 of Article 26, to that of the Contracting State of which it is a national or resident. of which he is a national or citizen. The case must be submitted within three years from the first notification of The case must be submitted within three years after the first notification of the measure that results in taxation not in accordance with the provisions of the Convention.
  1. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view of the Contracting State, with a view to the avoidance of taxation not in accordance with the Convention. The agreement shall be applied irrespective of the time limits The agreement shall be applied irrespective of the time limits provided by the domestic law of the Contracting States.
  1. The competent authorities of the Contracting States shall endeavor by mutual agreement to resolve any difficulties or doubts or to resolve any doubts as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.
  1. The competent authorities of the Contracting States may communicate directly with each other with a view to reaching an agreement as described in the preceding paragraphs. If oral exchanges of views appear likely to facilitate such agreement, such exchanges of views may take place in a Commission composed of representatives of the competent authorities of the Contracting States.

 

Article 28

Exchange of Information

  1. The competent authorities of the Contracting States shall exchange such information as is necessary to carry out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Information received by a Contracting State shall be treated as secret in the same manner as information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of the assessment or collection of, or proceedings or prosecution in respect of, the taxes covered by the Convention, or in the determination of appeals in relation to such taxes. Such persons or authorities shall use such information only for such purposes. They may disclose such information in public court proceedings or in judgments.
  1. In no case shall the provisions of paragraph 1 be construed to require a Contracting State to

(a) to take administrative action at variance with the laws and administrative practice of that or of the other Contracting State; 1711 (b) to supply information which is not obtainable under the laws or in the normal course of the

(b) to supply information that is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

 

Article 29

Diplomatic Agents and Consular Officers

The provisions of this Convention shall not affect the fiscal privileges of diplomatic agents or consular officers in diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements.

 

Article 30

Entry into force

  1. The present Convention shall be ratified and the instruments of ratification exchanged as soon as possible.
  1. The Convention shall enter into force thirty days after the exchange of the instruments of ratification and its provisions shall

(a) taxes imposed at source on income allocated or paid on or after the first day of January next following the year in which the instruments of ratification are exchanged;

(b) other taxes imposed for tax years beginning on or after the first day of January of the year following the year in which the instruments of ratification are exchanged.

 

Article 31

Denunciation

This Convention shall remain in force until terminated by a Contracting State. Each Contracting State may denounce the Convention through diplomatic channels with a minimum of six months’ notice before the end of each calendar of each calendar year and after a period of five years from the date of its entry into force. In such case, the Convention shall cease to have effect:

(a) to taxes imposed at source on income allocated or paid on or after the first day of January next following the year of denunciation

(b) other taxes levied for tax years beginning on or after January 1 of the year immediately following the year of termination.

IN WITNESS WHEREOF the undersigned, duly authorized to that effect, have signed this Convention.

DONE in duplicate in Luxembourg, this 14th day of December 1993, in the French and Romanian languages, both texts being equally authentic.

 

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