Ratification of the Convention between Romania and the Principality of Liechtenstein: Law no. 16/2024

The takeaway 

Romania has ratified the Convention concluded with the Principality of Liechtenstein, for the elimination of double taxation with regard to taxes on income and capital, and for the prevention of fiscal evasion and avoidance of the payment of taxes (the Convention), and the Protocol thereto, signed in Berne on 10 November 2022.

The ratification is the mutual notification, in writing, through diplomatic channels, between the two states, to fulfill the procedures for the entry into force of the Convention.

The Convention enters into force on the last day of the month in which the last of the notifications is received and takes effect on or after the first day of January of the calendar year immediately following the year in which the Convention enters into force.

In detail

Law no. 16/2024 the Convention between Romania and the Principality of Liechtenstein has been ratified. It regulates the exchange of information, the methods of eliminating double taxation, non-discrimination, the amicable procedure, the entry into force and the termination of the validity of the Convention. Law no. 16/2024 also includes the provisions of the Protocol, which are an integral part of the Convention.

Among other things, the Convention established the following aspects:

• A withholding tax rate of 5% for both interest and royalties. However, interest can only be taxed in the state of its beneficial owner, in certain cases.

• A withholding tax rate of 10% on dividends. However, a zero rate may apply if certain conditions are met.

The Convention also regulates the taxation of capital, of income in the form of salaries and pensions, of income obtained by students, practitioners, performing artists and athletes, of income obtained from the capitalisation of capital, as well as the aspects related to the exchange of information, the methods of elimination of double taxation, non-discrimination, amicable procedure, entry into force and termination of validity of the Convention.

For a more detailed discussion of the impact these provisions may have in your specific case, please contact us.

Source: [Law no. 16/2024 regarding the ratification of the Convention between Romania and the Principality of Liechtenstein for the elimination of double taxation with regard to income and capital taxes and the prevention of tax evasion and the avoidance of the payment of taxes and the Protocol to the convention, signed in Bern on 10 November 2022, published in the Monitorul Oficial no. 31 dated 15 January 2024]