The discriminatory tax treatment for non-residents has brought Romania a notification from the European Commission, which asks the country to change the legislation and treat both non-residents and residents the same way when it comes to paying taxes. The EC notification was triggered by a complaint submitted by KPMG Romania, according to Ziarul Financiar.

The discriminatory tax regime applied in Romania disturbs the business environment, by indirectly increasing financing costs from foreign sources, and even costs generated by the use of intellectual property rights registered in other countries. The tax regime mainly impacts foreign individuals and companies which obtain revenues taxed locally, such as interests and royalties.

For example, a foreign company that makes revenues from interests in Romania pays a tax in Romania for the entire revenues, without deducting any costs, while a Romanian company that does the same activity can deduct costs and thus pays a tax only on the net amount. Romania has two months to change the legislation, and if it fails to do so, the EC can go to court against Romania.

editor@romania-insider.com