HMRC internal manual

Double Taxation Relief Manual

DT: Romania: double taxation agreement, Article 24: Elimination of double taxation

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(1) Romanian tax payable under the laws of Romania and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within Romania (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Romanian tax is computed. Such credit shall be allowed in accordance with the existing provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom and any subsequent modification of those provisions which, however, shall not affect the principle hereof.

(2) Where a resident of Romania derives income or capital gains which, in accordance with the provisions of this Convention, may be taxed in the United Kingdom, Romania shall allow as a deduction from the Romanian tax on the income or capital gains respectively of that person an amount equal to the tax paid in the United Kingdom on that income or capital gains, as the case may be. Such deduction shall not, however, exceed that part of the Romanian tax which is appropriate to the income or capital gains which may be taxed in the United Kingdom.

For the purposes of this paragraph profits paid by Romanian State enterprises to the State budget shall be deemed to be Romanian tax.

(3) For the purposes of paragraphs (1) and (2) of this Article profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other Contracting State.

(4) Where profits on which an enterprise of a Contracting State has been charged to tax in that State are also included in the profits of an enterprise of the other State and the profits so included are profits which would have accrued to that enterprise of the other State if the conditions made between the enterprises had been those which would have been made between independent enterprises dealing at arm’s length, the amount included in the profits of both enterprises shall be treated for the purposes of this Article as income from a source in the other State of the enterprise of the firstmentioned State and relief shall be given accordingly under the provisions of paragraph (1) or paragraph (2) of this Article.