The Romanian Ministry of Finance (MoF) issued Circular No. 674003 on 20 January 2015, expounding the taxation of interest payments under the Austria-Romania Income and Capital Tax Treaty.
Main Changes are:
- According to article 11, paragraph 2 of the treaty, interest payments from Romania to Austria are subject to withholding tax at the rate of 3%.
- Under paragraph 2 of the protocol to the treaty, if and as long as Austria, under its national legislation, levies no withholding tax on interest paid to non-residents, the withholding tax rate of 3% is reduced to 0%.
- The competent authorities of Austria have informed Romania that, with effect from 1 January 2015, the interest payments to non-residents are subject to tax at a rate of 25%, with the exception, inter alia, of interest paid to companies.
Also, the Romanian MoF established that:
- Interest arising in Romania and paid to an individual resident of Austria is subject to 3% withholding tax rate.
- Interest arising in Romania and paid to a company resident of Austria remains subject to a 0% withholding tax.
