S.I. No. 427/1999 - Double Taxation Relief (Taxes on Income and Capital Gains) (Romania) Order, 1999.

1. This Convention shall be ratified and the instruments of ratification shall be exchanged as soon as possible. The Contracting States shall notify to each other, through diplomatic channels, that the constitutional requirements for the entry into force of this Convention have been complied with.

2. This Convention shall enter into force on the date of receipt of the later of these notifications and the provisions of the Convention shall apply

(

a

) In the case of Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after the sixth day of April in the year next following the date on which the Convention enters into force; and

(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January in the year next following the date on which the Convention enters into force;

(

b

) In the case of Romania

(i) in respect of taxes withheld at source, for income derived on or after the first day of January in the calendar year next following the year in which the Convention enters into force; and

(ii) in respect of other taxes on profits, income and capital gains, for any taxable year beginning on or after the first day of January in the calendar year next following the year in which the Convention enters into force.

Article 30

TERMINATION

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention at any time after five years from the date which the Convention enters into force provided that at least six months prior notice of termination has been given through diplomatic channels.

In such event, this Convention shall cease to have effect

(

a

) In the case of Ireland

(i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after the sixth day of April in the year next following the date on which the period specified in the said notice of termination expires; and

(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January next following the date on which the period specified in the said notice of termination expires;

(

b

) In the case of Romania

(i) in respect of taxes withheld at source, for income derived on or after the first day of January in the calendar year next following the date on which the period specified in the said notice of termination expires; and

(ii) in respect of other taxes on profits, income and capital gains, for any taxable year beginning on or after the first day of January in the calendar year next following the date on which the period specified in the said notice of termination expires.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Convention.

DONE in duplicate at Bucharest this 21st day of October, 1999, in the English and Romanian languages, both texts being equally authentic. In the case of a divergence of interpretation, the English text shall prevail.

For Ireland

For Romania,

Martin Cullen

Decebal Traian Remes

GIVEN under the Official Seal of the Government, this 22nd day of December, 1999.

BERTIE AHERN,

Taoiseach.

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

This Order gives the force of law to the Convention with Romania which is set out in the Schedule. The effect of the Convention is summarised below.

This Convention with Romania, which was signed in Bucharest on 21st October, 1999, is comprehensive in scope and is based on the OECD Model Convention.

It provides for the allocation of taxing rights between Ireland and Romania and for the granting of relief from double taxation with regard to items of income and capital gains which, under the laws of Ireland and the laws of Romania, may be taxed in both countries.

In many cases, the Convention awards the taxation right over items of income and gains to the country of residence of the recipient only, for example for items such as business profits and gains on movable property, provided such income or gains do not arise through a permanent establishment or fixed base in the country of source, profits from the operation of ships or aircraft engaged in international traffic and non-governmental pensions. In other cases, such as remuneration in respect of services rendered to the Government of either country, the Convention awards the sole taxation right to the country of source.

Source country taxation of dividends, interest and royalties is limited to 3% of the gross payment. In the case of interest and royalties certain payments are exempt, such as interest on any loan granted by a bank or other financial institution or cultural and scientific royalties.

Where both countries continue to have taxing rights, for example in the case of dividend interest and royalty income, business profits arising through a permanent establishment which a person resident in one country has in the other country, or in the case of capital gains arising from the disposal of immovable property or shares linked with immovable property, the Convention provides that the country of residence of the recipient of the income or gain will give credit against its tax on the income or gains for the tax paid in the other country on the same income or gains.

The Convention also provides for safeguarding nationals and enterprises of one country against discriminatory taxation in the other country, for consultation between the competent authorities of the two countries for the purpose of resolving any doubts or difficulties arising as to the interpretation or application of the Convention and for the exchange of such information between these authorities as is necessary for carrying out the provisions of the Convention or of the domestic law of either country in relation to the taxes covered by the Convention.

The Convention will enter into force on the date of the later of the notification by each country to the other of the completion of its procedures for bringing it into force. It will thereupon have effect in both countries for tax periods beginning in the following year.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement, in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

Article 27

EXCHANGE OF INFORMATION

5. Salaries, wages and similar remuneration derived by a resident of a Contracting State in respect of an employment connected with specified activities in the other Contracting State may, to the extent that the duties are performed offshore in that other State, be taxed in that other State.

Article 24

ELIMINATION OF DOUBLE TAXATION

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 13

CAPITAL GAINS

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.

Article 12

ROYALTIES

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6

INCOME FROM IMMOVABLE PROPERTY

WHEREAS it is enacted by

sections 826

(1) and

828

of the

Taxes Consolidation Act, 1997

(No. 39 of 1997), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, corporation tax or capital gains tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment other than

section 168

of the

Taxes Consolidation Act, 1997

, have the force of law

AND WHEREAS it is further enacted by

section 826

(6) of the

Taxes Consolidation Act, 1997

, that where such an order is proposed to be made, a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of the following Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

sections 826

(1) and

828

of the

Taxes Consolidation Act, 1997

(No. 39 of 1997), hereby order as follows