Romania has changed its fiscal code to allow tax exemption for both income and capital gain tax on Government Securities and to change change the statutory withholding tax rate applicable for dividend income in Romania from 16% to 10%, applicable for both resident and non-resident investors, according to a statement from ING Securities Services, Romania.
The text of the official announcement on tax exemption for Government Securities and decrease of dividend tax is below:
According to the Emergency Ordinance amending Law 571/2003 regarding Fiscal Code issued by the Romanian Government and published in the Official Gazette on 24.06.2008,new fiscal changes will come into force starting with January 1st 2009:
1. Tax exemption for both income and capital gain tax on Government Securities. Currently the income was tax exempted however no clear guidelines existed in respect of CGT for Government Securities.2. Change of statutory withholding tax rate applicable for dividend income paid by issuers in Romania for non-resident investors, from 16% to 10%. This provision is applicable only for investors residing in EU and the following states: Iceland, Liechtenstein, Norway. This provision is not applicable for individuals. For the other states of the world (including US) the withholding tax of 16% remains in force. The new withholding tax of 10% will be applied for the dividends related to the fiscal year 2008, paid out during 2009.
The Ordinance reinforces as well an existing provision as follows: Dividends paid by a Romanian issuer to a legal person resident of an EU member state or one of the following states: Island, Liechtenstein, Norway are not subject to taxation in Romania provided that the dividends beneficiary holds a participation in the respective issuer of at least 15% (10% starting from January 2009) for an uninterrupted period of minimum 2 years , period ending at the moment when the dividend is paid.