Order no. 1.099/2016 (hereinafter, „The Order”), published in the Official Gazette no. 577/29 July 2016, regulating certain aspects related to Romanian tax residence for individuals.
The summary of the key aspects is as follows:
- Clarifications on partial Romanian tax residence: if an individual arrives to Romania within the tax year, he/she will become subject to taxation on his/her worldwide income as of the moment of being assessed as a Romanian tax resident; he/she will be deemed as non-tax resident in Romania and will be taxed to Romanian source income only for the period starting his/her arrival until the moment of being assessed as tax resident in Romania;
- The foreign individuals assessed as Romanian tax residents who leave Romania for more than 183 days in any twelve consecutive months shall be deemed as non-residents in Romania from the moment of their departure, without being liable to make proof of the change of their tax residence;
- The Romanian tax residents, who have their domicile in Romania, shall be deemed as Romanian tax residents, taxable on their worldwide income in Romania, until the change of their tax residence. Thus, in practice this should eliminate cases when the tax offices do not accept the change in the tax residency for a retroactive period;
- Permanent home available to an individual (an important criteria for assessing the tax residence) shall be deemed to be any place permanently available to him/her and/or family members (either owned or rented). Thus, the Order would normally clarify also the case when certain tax offices were disagreeing in the past to consider the places rented by a third party for a certain individual and/or family members as being a permanent home;
- The Order updates the content of the Tax Residence Questionnaires due upon arrival/departure to/from Romania, as well as the Notifications issued by the tax authorities (e.g., the notifications shall indicate the moment since when the individual is assessed as a Romanian tax or non-tax resident).
Important aspects which remained unchanged:
- The individuals coming to Romania for more than 183 days within any twelve consecutive months period ending in the calendar year concerned have to ensure they file the Tax Residence Questionnaire with the relevant Romanian tax office;
- The individuals leaving Romania (including the Romanian nationals keeping their domicile in Romania) for more than 183 days within any twelve consecutive months have to ensure they file the Tax Residence Questionnaire before they leave Romania;
- The individuals who are/become residents of another state have to obtain a tax residence certificate and make it available to the Romanian tax authorities (except for the specific cases provided by the law);
- The individuals have to notify the tax authorities about any change to the initially provided information relevant for assessing their tax residence and the tax office will issue, if the case, a new notification;
- The individuals have to present various supporting documents (e.g., employment/assignment contracts, rental contracts). They may also be requested to present a certificate attesting the tax deregistration from the other state. All the documents have to be translated into Romanian.
Upon the entry into force of the current Order, the previous Order of the Ministry of Public Finance no. 74/2012 is abolished.
The Order’s provisions come into force as of 29 July 2016.