Australian Tax Treaties
Romanian Agreement
AGREEMENT BETWEEN AUSTRALIA AND ROMANIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
ARTICLE 23
Methods of Elimination of Double Taxation
1
In the case of Romania, double taxation shall be eliminated as follows:
(a) subject to subparagraph (b), where a resident of Romania derives income, profits or gains which, in accordance with the provisions of this Agreement, are taxable in Australia, then Romania shall exempt from tax such income, profits or gains. However Romania may, in calculating the amount of tax on the remaining income of that resident, take into account the exempted income, profits or gains; and
(b) where a resident of Romania derives items of income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Australia, Romania shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in Australia. However, that deduction shall not exceed that part of the tax, as computed before the deduction is given, which is attributable to that income from Australia.
2
In the case of Australia, double taxation shall be eliminated as follows:
(a) subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle of this Article), Romanian tax paid under the law of Romania and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Romania shall be allowed as a credit against Australian tax payable in respect of that income; and
(b) where a company which is a resident of Romania and is not a resident of Australia for the purposes of Australian tax pays a dividend to a company which is a resident of Australia and which controls directly or indirectly not less than 10 per cent of the voting power of the firstmentioned company, the credit referred to in subparagraph (a) shall include the Romanian tax paid by that firstmentioned company in respect of that portion of its profits out of which the dividend is paid.
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) has modified the application of this tax treaty. A synthesised text of the MLI and this tax treaty is available to facilitate the understanding of how the MLI modifies this tax treaty.
In the case of Romania, double taxation shall be eliminated as follows:
(a) subject to subparagraph (b), where a resident of Romania derives income, profits or gains which, in accordance with the provisions of this Agreement, are taxable in Australia, then Romania shall exempt from tax such income, profits or gains. However Romania may, in calculating the amount of tax on the remaining income of that resident, take into account the exempted income, profits or gains; and
(b) where a resident of Romania derives items of income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Australia, Romania shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in Australia. However, that deduction shall not exceed that part of the tax, as computed before the deduction is given, which is attributable to that income from Australia.
2
In the case of Australia, double taxation shall be eliminated as follows:
(a) subject to the provisions of the law of Australia from time to time in force which relate to the allowance of a credit against Australian tax of tax paid in a country outside Australia (which shall not affect the general principle of this Article), Romanian tax paid under the law of Romania and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Australia from sources in Romania shall be allowed as a credit against Australian tax payable in respect of that income; and
(b) where a company which is a resident of Romania and is not a resident of Australia for the purposes of Australian tax pays a dividend to a company which is a resident of Australia and which controls directly or indirectly not less than 10 per cent of the voting power of the firstmentioned company, the credit referred to in subparagraph (a) shall include the Romanian tax paid by that firstmentioned company in respect of that portion of its profits out of which the dividend is paid.
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