2. Table (Radocea/Twardosz)

DTT Austria/Romania

DTT Austria/Romania vs OECD-MC
Income and Capital Tax Treaty (2008)

Entry into force

1 February 2006

Effective Date

1 January 2007

Art 4 Resident

Art 4 of this Convention does not contain any special provisions in contrast to the OECD-MC.

Art 5 Permanent establishment

Art 5 para 4 lit d of this Convention foresees that the term „permanent establishment“ shall be deemed not to include the maintenance of a stock of goods or merchandise belonging to the enterprise, which is exhibited at a trade fair or exhibition, and which is sold by the enterprise at the end of such fair or exhibition.

Art 6 Income from immovable property

In contrast to the OECD-MC, Art 6 para 4 of this Convention stipulates that the provisions of para 1 and para 3 of this Article shall also apply to income from immovable property in use for the performance of independent personal services. This means that income derived from such immovable property situated in the other Contracting State is taxable in the other Contracting State.

Art 7 Business profits

Art 7 of this Convention corresponds to Art 7 of the OECD-MC.

Art 8 International traffic

Art 8 of this Convention corresponds to the OECD-MC.

Art 10 Dividends

In contrast to the OECD-MC, Art 10 para 2 lit a of this Convention states that dividends may be taxed in the Contracting State of which the legal entity paying the dividends is a resident and according to the laws of that State, but the withholding tax shall not exceed 0 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends.
Art 10 para 2 lit b, in contrast to the OECD-MC, provides that in all other cases the withholding tax shall not exceed 5 per cent of the gross amount of the dividends.

Art 11 Interest

According to Art 11 para 2 of this Convention, interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner is a resident of the other Contracting State, the withholding tax shall not exceed 3 per cent of the gross amount of the interest.
Art 11 para 3 of this Convention provides that, notwithstanding the provisions of para 2, interest arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the State of residence if the payer or the recipient of the interest is the Government of a Contracting State itself, a local authority or an administrative territorial unit thereof or the Central Bank of a Contracting State or the interest is paid in respect of a loan granted, approved, guaranteed or insured by the Government of a Contracting State, the Central Bank of a Contracting State or any financial institution owned or controlled by the Government of a Contracting State or the interest is paid in respect of a loan granted by a bank or any other financial institution (including an insurance company) or the interest is paid on a loan made for a period of more than 2 years or the interest is paid in connection with the sale on credit of any industrial, commercial or scientific equipment.

Art 12 Royalties

In contrast to the OECD-MC, Art 12 para 2 of this Convention stipulates that royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner is a resident of the other Contracting State, the withholding tax shall not exceed 3 per cent of the gross amount of the royalties.

Art 13 Capital gains

Art 13 of this Convention contains a special provision concerning gains from the alienation of shares or comparable interests in a company, the assets of which consist wholly or principally of immovable property.

Art 14 Independent personal services

This Convention still includes an Art 14 (which is deleted in the OECD-MC) stating that income derived from professional activities or other activities of an independent character shall be taxable only in the state

of residence, except if the earner has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities (and this only applies to the income that is attributable to the fixed base).

Art 15 Dependent personal services

Art 15 of this Convention corresponds to the OECD-MC.

Art 16 Directors' fees

Art 16 of this Convention corresponds to Art 16 of the OECD-MC, including special provisions concerning directors' fees.

Art 17 Artistes and sportsmen

Art 17 para 3 of this Convention, in contrast to the OECD-MC, provides that income derived from the activities performed within the framework of cultural or sports exchanges agreed to by the Government of the Contracting States shall be exempt from tax, only if such activities are not carried on for the purpose of profits.

Art 21 Professors and researchers

In contrast to the OECD-MC, Art 21 of this Convention contains special provisions concerning individuals who are teaching or carrying out research.

Art 22 Other income

Art 22 of this Convention – corresponding to Art 21 of the OECD-MC – states that income not dealt with in the other articles of the Convention shall be taxable only in the State of residence.
In addition, Art 22 para 3 states that income derived by a resident of a Contracting State from the other Contracting State under a legal claim to maintenance may not be taxed in the State of residence if such income would be exempt from tax according to the laws of the other Contracting State.

Art 24 Elimination of double taxation

According to Art 24 of this Convention, double taxation shall be avoided in Austria by the exemption method with progression and in Romania by the credit method.

Art 27 Exchange of information

Art 27 para 1 of this Convention stipulates that the competent authorities of the Contracting States shall exchange information concerning taxes covered by the Convention insofar as the taxation arising thereunder is not contrary to the Agreement.