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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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DT: Romania: double taxation agreement, Article 13: Commission

 

(1) Commission arising in one of the Contracting States and paid to a resident of the other Contracting State may be taxed in that other Contracting State.

(2) Commission may also be taxed in the Contracting State in which it arises and according to the law of that Contracting State; but where it is paid to a resident of the other Contracting State the tax so charged shall not exceed 12½per cent of the gross amount of the commission.

(3) The term `commission` as used in this Article means payments made to any person for services rendered by him as an agent; but it does not include payments for independent personal services mentioned in Article 15 or dependent personal services mentioned in Article 16.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the recipient of the commission, being a resident of one of the Contracting States, has in the other Contracting State in which the commission arises a permanent establishment with which the commission is effectively connected. In such a case the provisions of Article 7 shall apply.

(5) Commission shall be deemed to arise in one of the Contracting States when the payer is the Government of that Contracting State or a political subdivision thereof, a local authority or a resident of that Contracting State. Where, however, the person paying the commission whether he is a resident of one of the Contracting States or not, has in one of the Contracting States a permanent establishment in connection with which the obligation to pay the commission was incurred and the commission is borne by that permanent establishment, then the commission shall be deemed to arise in that Contracting State.

(6) Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the commission paid, having regard to the services for which it is paid exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case the excess part of the payments shall remain taxable according to the law of each Contracting State due regardbeing had to the other provisions of this Convention.

(7) If a resident of one of the Contracting States who receives commission which arises inthe other Contracting State so elects for any year of assessment, or financial year, thetax chargeable in respect of that commission in the Contracting State in which it arises shall be calculated as if he had a permanent establishment in that Contracting State and as if that commission were taxable in accordance with Article 7 as profits attributable to that permanent establishment.