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On July 15th 2019, NAFA (National Agency of Fiscal Administration) issued a press release launching the Guide on tax residence of natural persons in English. The information material is published and can be downloaded here.
These guidelines are aimed at resident/non-resident individuals who leave/arrive in Romania and for whom it is necessary to establish or change the fiscal residence for purposes of taxation of income received.

I. Who must declare their tax residence?

NAFA reminds natural persons – taxpayers what obligations they have regarding the questionnaires to be submitted in order to establish the fiscal residence:

  • The natural persons who leave the country for a period (or more periods) of residence abroad which exceeds 183 days in total, during any interval of 12 consecutive months, have the obligation to complete and submit the form “Questionnaire for establishing the fiscal residence of the natural person upon leaving Romania”;
  • The natural persons arriving in Romania whose stay in the country exceeds in total 183 days (in one or more periods) during any interval of 12 consecutive months, have the obligation to complete the form “Questionnaire for establishing the fiscal residence of the natural person upon arrival in Romania”.
    The obligation to submit questionnaires for establishing the tax residence both on leaving and upon arrival in Romania is regulated by the Order of the Minister of Public Finance no. 1099/2016 for the regulation of certain aspects regarding the residence in Romania of natural persons.

II. Elements which attest residence in Romania

The main elements considered for determining residence, according to the Fiscal Code, further amended and supplemented, are:

  • a home address in Romania;
  • a permanent home of the individual in Romania (this home can be personal property or rented, or remains available any time for this person and/or his/her family);
  • a centre of vital interests in Romania;
  • labour contract in Romania;
  • the fact that the individual is present in Romania for a period (or several periods) which totally exceed 183 days, during any period of 12 consecutive months, ending in the calendar year concerned.

Other elements which are considered in determining a residence in Romania or in a foreign state, in conjunction with the elements mentioned above include:

  • a vehicle registered in Romania/foreign state;
  • driving licence issued by the competent authority of Romania/foreign state;
  • passport issued by the competent authority of Romania/foreign state;
  • insurance in the social security system of Romania/foreign state during the whole period when he/she stays abroad/in Romania;
  • insurance in the health insurance system of Romania/foreign state during the whole period when he/she stays abroad/in Romania.

If a non-resident individual does not prove the residence in a state with which Romania has signed a convention for avoidance of double taxation or is resident of a state with which Romania has not signed a convention and fulfils the residence conditions established by the law, it is considered that he/she is resident in Romania. In this case, that person has a full fiscal obligation in Romania, being subject to income tax for the income obtained from any source, both from Romania and from outside Romania, since the date when he/she becomes resident in Romania, when he/she is issued the certificate of fiscal residence at request.
In the certificate of fiscal residence, the competent central fiscal body will certify the year/years or the period of a year for which the individual is resident in Romania.

III. Establishment of residence by the competent central fiscal body

Individuals have the obligation to enclose to the form “Set of questions for determining the fiscal residence of the individual on the arrival in Romania” the following supporting documents:

  • copy of valid passport, (citizens of European Union enclose the copy of valid passport or the national identity document);
  • copy of identity card/ permanent residence card/ residence permit/ certificate of fiscal registration issued by the competent authority of Romania;
  • documents which attest the existence of a house of the individual in Romania (property or rented);
  • as applicable, the certificate of fiscal residence issued by the competent authority of the foreign state with which Romania has signed a convention for avoidance of double taxation or another document issued by another authority which has assignments in the field of certification of fiscal residence according to the internal laws of that state, in original or in notarised copy;
  • a document issued by the foreign fiscal authority which attests that the individual is removed from its fiscal records;
  • any other documents which can be the basis for determination of residence of individual.

The Certificate of fiscal residence issued by the competent authority of the foreign state with whom Romania has signed a convention for avoidance of double taxation is valid for the year(s) for which it is issued.

The following persons do not have the obligation to submit the form “Set of questions for determining the fiscal residence of the individual on the arrival in Romania”:

  • foreign citizens with diplomatic or consular status in Romania;
  • foreign citizens who are civil servants or employees of an international or intergovernmental body recorded in Romania;
  • foreign citizens who are civil servants or employees of a foreign state in Romania;
  • members of the families of the persons above, with observance of the general rules of international law or the provisions of the special agreements to which Romania is Party.

Non-resident individuals who have arrived in Romania before 1st of January 2014 and who request the issue of the “Certificate of fiscal residence for application of Convention/Agreement for avoidance of double taxation between Romania and…, for individuals resident in Romania” have the obligation to fill in the form “Set of questions for determining the fiscal residence of the individual on the arrival in Romania”, and also to submit proof of payment of income tax for income obtained from any source worldwide for the categories of incomes subject to taxation in Romania .

Following the submission of questionnaires, the fiscal body analyses the specific situation of the natural person, taking into account the provisions of the convention for avoiding double taxation or the provisions of the Fiscal Code, as the case may be, as well as the documentation presented by the taxpayers, in order to establish the fiscal residence and within 30 days from the submission notifies the individual if he/she has a full fiscal obligation in Romania or will be taxed only for the income obtained in Romania.

If an individual becomes resident in Romania only for a period of a fiscal year, this individual has a full fiscal obligation in Romania only for that period of the fiscal year when he/she is considered resident. For the period of fiscal year, respectively from the date of arrival in Romania until the date when he/she becomes resident in Romania, the individual is considered non-resident, being subject to taxation only for the income obtained in Romania.

IV. When leaving Romania

The non-resident individual who had the obligation to fill in the form “Set of questions for determining the fiscal residence of the individual on the arrival in Romania” and obtained residence in Romania during the stay, when leaving Romania must fill out only “Set of questions for determining the residence of the individual when leaving Romania” and will not make the proof of change of fiscal residence in another state. The individual is considered resident in Romania until he/she leaves Romania for a period or several periods of stay abroad which totally exceed 183 days, during any interval of 12 consecutive months.

The non-resident individual who, during the stay in Romania, has proven residence in another state with whom Romania has signed a Convention for avoidance of double taxation and who had the obligation to fill in the form “Set of questions for determining the fiscal residence of individual on the arrival in Romania”, when leaving Romania must fill in the form “Set of questions for determining the fiscal residence of the individual when leaving Romania”.

V. Sanctions

The submission of the “Set of questions for determining the residence of the individual on the arrival in Romania/when leaving Romania”, is the object of Law no. 270/2017 –Prevention Law, which sets forth that if a contravention was committed and noted, a report for observation of contravention is signed and a warning issued, in which case no fines are applied.

Stefania Costea
Consultant
Investment and Immigration Division
T: +40 374 413283
E: stefania.costea@eurofast.eu
W: www.eurofast.eu

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