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Romania-UK Double Tax Treaty

Romania-UK Double Tax Treaty

The United Kingdom of Great Britain and Northern Ireland and Romania have concluded a convention for the avoidance of double taxation with respect to the taxes on income and capital gains. It applies to persons who are residents of one or both states and protects individuals from being taxed twice for the same income, once in the country where the income is obtained and twice in the country where the income is brought (the country of residence).

Our Romanian accountants can give you additional information about taxes in Romania and how such a bilateral treaty can influence your business.

The taxes covered by the UK-Romania treaty

The double taxation agreement between Great Britain and Romania covers a series of taxes imposed by the governments of the two countries, irrespective of the manner in which they are levied. For the United Kingdom the taxes are:

– the income tax;

– the corporate tax;

– the capital gains tax.

For Romania, the taxes covered by the treaty are:

– the tax on income derived by individuals and corporate bodies; 

– the tax on the profits of joint companies;

– the tax on income derived from agricultural activities.

For the purpose of the agreement, a joint company in Romania that benefits from the provisions of the treaty is a company constituted with the participation of Romanian economic organizations and foreign partners.

The scope of the treaty and general definitions

As the treaty applies only to nationals, it is useful to describe how the term is defined in the legal document. A UK national is an individual who possesses the national status of citizen, according to the UK laws, or is an association or other legal entity that obtained the status according to the UK laws. In Romania, a national is an individual who possesses citizenship or a legal person or other business entity incorporated in Romania, according to the laws in force. 

The double tax treaty describes the taxation method for income derived from immovable property, business profits, profits produced from international transport activities, dividends, interest, royalties and capital gains, independent or dependent personal services and others.

The accountants at our Bucharest accounting firm can tell you more about the taxation of dividends derived from a resident Romanian company by a resident UK company.

You can contact our team, if you need accountancy services in Romania.