DOUBLE TAXATION RELIEF ON TAXES ON INCOME WITH ROMANIA ORDER

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH ROMANIA

SUBSIDIARY LEGISLATION 123.42

DOUBLE TAXATION RELIEF ON TAXES ON

INCOME WITH ROMANIA ORDER

16th August, 1996

LEGAL NOTICE 65 of 1997.

The title of this Order is Double Taxation Relief on Taxes

on Income with Romania Order.

AGREEMENT BETWEEN THE GOVERNMENT OF MALTA

AND THE GOVERNMENT OF ROMANIA

FOR THE AVOIDANCE OF DOUBLE TAXATION

AND THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME

The Government of Malta and the Government of Romania, desiring to conclude

an Agreement for the avoidance of double taxation and the prevention of fiscal

evasion with respect to taxes on income, and to promote and strengthen the

economic relations between the two countries on the basis of national sovereignty

and respect of independence, full equal rights, mutual advantage and non-

interference in the internal affairs, have agreed as follows

ARTICLE 1

Personal Scope

This Agreement shall apply to persons who are residents of one or both of the

Contracting States.

ARTICLE 2

Taxes Covered

1. This Agreement shall apply to taxes on income imposed by each of the

Contracting States or by its territorial - administrative units, irrespective of the

manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total

income, or on elements of income, including taxes on gains from the alienation of

movable or immovable property.

It is hereby declared;

(a) that the arrangements specified in the Agreement set

out in the Schedule to this Order have been made with

the Government of Romania with a view to affording

relief from double taxation in relation to the following

taxes imposed by the laws of Romania

(i) the tax on income derived by individuals;

(ii) the tax on profit;

(iii) the tax on salaries and other similar

remuneration;

(iv) the tax on dividends;

(v) the tax on agricultural income;

(b) that it is expedient that those arrangements should

have effect.

The existing taxes to which this Agreement shall apply are in particular

(a) in the case of Romania

(i)

the tax on income derived by individuals;

(ii)

the tax on profit;

(iii)

the tax on salaries and other similar remuneration;

(iv)

the tax on dividends; and

(v)

the tax on agricultural income;

(hereinafter referred to as "Romanian tax");

(b) in the case of Malta

the income tax;

(hereinafter referred to as "Malta tax").

This Agreement shall also apply to any identical or substantially similar

taxes which are imposed after the date of signature of this Agreement in addition to,

or in place of, the existing taxes. The competent authorities of the Contracting States

shall notify each other of any significant changes which have been made in their

respective taxation laws.

ARTICLE 3

General Definitions

1. For the purposes of this Agreement, unless the context otherwise requires

(a) the terms "a Contracting State" and "the other Contracting State" mean

Romania or Malta as the context requires;

(b) the term "Romania" means Romania and, used in a geographical sense,

indicates the territory of Romania including its territorial sea as well as the exclusive

economic zone over which Romania exercises sovereignty, sovereign rights and

jurisdiction in accordance with its internal law and with the international law,

concerning the exploration and exploitation of the natural, biological and mineral

resources existing in the sea waters, sea bed and subsoil of these waters;

(c) the term "Malta" means the Republic of Malta and, when used in a

geographical sense, the term "Malta" means the Island of Malta, the Island of Gozo

and the other islands of the Maltese Archipelago including the territorial waters

thereof, and any area outside the territorial waters of Malta which, in accordance

with international law, has been or may hereafter be designated, under the law of

Malta concerning the Continental Shelf, as an area within which the rights of Malta

with respect to the sea bed and subsoil and their natural resources may be exercised;

(d) the term "person" includes an individual, a company and any other body of

persons;

(e) the term "company" means any body corporate or any entity which is treated

as a body corporate for tax purposes;

(f)

the terms "enterprise of a Contracting State" and/or "enterprise of the other

Contracting State" mean, respectively, an enterprise carried on by a resident of a

Contracting State and/or an enterprise carried on by a resident of the other

Contracting State;

(g)

the term "nationals" means

(i)

in respect of Romania, all individuals possessing the citizenship of

Romania and all legal persons or other entities set up under its own

legislation;

(ii) in respect of Malta, any citizen of Malta and any legal person,

partnership or association deriving its status as such in accordance with

its own legislation;

(h) the term "international traffic" means any transport by a ship, boat, aircraft,

railway or road vehicle operated by an enterprise which has its place of effective

management in a Contracting State, except when the ship, boat, aircraft, railway or

road vehicle is operated solely between places in the other Contracting State;

(i)

the term "competent authority" means

(i)

in the case of Romania, the Minister of Finance or his authorized

representative;

(ii) in the case of Malta, the Minister responsible for finance or his

authorized representative.

2. In the application of this Agreement by a Contracting State any term not

otherwise defined shall, unless the context otherwise requires, have the meaning

which it has under the law of that State concerning the taxes to which this

Agreement applies.

DOUBLE TAXATION RELIEF ON TAXES ON INCOME

WITH ROMANIA

ARTICLE 4

Resident

1. For the purposes of this Agreement, the term "resident of a Contracting

State" means any person who, under the laws of that State, is liable to tax therein by

reason of his domicile, residence, place of management or any other criterion of a

similar nature.

2. Where by reason of the provisions of paragraph 1 an individual is a resident

of both Contracting States, then his status shall be determined as follows

(a) he shall be deemed to be a resident solely of the Contracting State in

which he has a permanent home available to him; if he has a permanent

home available to him in both Contracting States, he shall be deemed to

be a resident solely of the Contracting State with which his personal and

economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests

cannot be determined, or if he has not a permanent home available to

him in either Contracting State, he shall be deemed to be a resident

solely of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of

the Contracting States, he shall be deemed to be a resident solely of the

Contracting State of which he is a national;

(d) if he is a national of both Contracting States or of neither of the

Contracting States, the competent authorities of the Contracting States

shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an

individual is a resident of both Contracting States, then it shall be deemed to be a

resident solely of the Contracting State in which its place of effective management is

ARTICLE 5

Permanent Establishment

1. For the purposes of this Agreement, the term "permanent establishment"

means a fixed place of business through which the business of an enterprise is

wholly or partly carried on.

2. The term "permanent establishment" includes especially

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f)

a mine, an oil or gas well, a quarry or any other place of extraction of

natural resources;

(g) a building site or construction or assembly project or supervisory

activities in connection therewith which continues for more than 12

months;

(h) the furnishing of services, including consultancy services, by an

enterprise of a Contracting State through its employees or other

personnel, where activities of that nature continue in the other

Contracting State for a period or periods aggregating more than 183

days within any twelve-month period.

3. Notwithstanding the preceding provisions of this Article, the term

"permanent establishment" shall be deemed not to include

(a) the use of facilities solely for the purpose of storage, display or delivery

of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of

purchasing goods or merchandise, or of collecting information, for the

enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of

advertising, for supply of information, for scientific research or for

similar activities which have a preparatory or auxiliary character for the

enterprise;

(f)

the maintenance of goods or merchandise exposed by the enterprise in a

fair or an exhibition which are sold after the closing of the said fair or

exhibition.

4. Notwithstanding the provisions of paragraphs 1 and 2, where a person -

other than an agent of an independent status to whom paragraph 5 applies - is acting

on behalf of an enterprise and has, and habitually exercises, in a Contracting State an

authority to conclude contracts in the name of the enterprise, that enterprise shall be

deemed to have a permanent establishment in that State in respect of any activities

which that person undertakes for the enterprise, unless the activities of such person

are limited to those mentioned in paragraph 3 which, if exercised through a fixed

place of business, would not make this fixed place of business a permanent

establishment under the provisions of that paragraph.

An enterprise of a Contracting State shall not be deemed to have a

permanent establishment in the other Contracting State merely because it carries on

business in that other State through a broker, general commission agent or any other

agent of an independent status, where such persons are acting in the ordinary course

of their business. However, when the activities of such an agent are devoted wholly

or almost wholly on behalf of the enterprise, he shall not be considered an agent of

an independent status within the meaning of this paragraph, if it is shown that the

transactions between the agent and the enterprise were not made under arm’s length

conditions.

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

1. Income derived by a resident of a Contracting State from immovable

property (including income from agriculture and forestry) situated in the other

Contracting State may be taxed in that other State.

2. The term "immovable property" shall have the meaning which it has under

the law of the Contracting State in which the property in question is situated. The

term shall in any case include property accessory to immovable property, livestock

and equipment used in agriculture and forestry, rights to which the provisions of

general law respecting immovable property apply, usufruct of immovable property

and rights to variable or fixed payments as consideration for the working of, or the

right to work, or to explore for, mineral deposits, sources and other natural

resources; ships, boats, aircraft, railway and road vehicles shall not be regarded as

immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct

use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from

immovable property of an enterprise and to income from immovable property used

for the performance of independent personal services.

ARTICLE 7

Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in

that State unless the enterprise carries on business in the other Contracting State

through a permanent establishment situated therein. If the enterprise carries on

business as aforesaid, the profits of the enterprise may be taxed in the other State but

only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a

Contracting State carries on business in the other Contracting State through a

permanent establishment situated therein, there shall in each Contracting State be

attributed to that permanent establishment the profits which it might be expected to

make if it were a distinct and separate enterprise engaged in the same or similar

activities under the same or similar conditions and dealing wholly independently

with the enterprise of which it is a permanent establishment.

3. In the determination of the profits of a permanent establishment, there shall

be allowed as deductions expenses of the enterprise, being expenses which are

incurred for the purposes of the permanent establishment (including executive and

general administrative expenses so incurred) and which would be deductible if the

permanent establishment were an independent entity which paid those expenses,

whether incurred in the Contracting State in which the permanent establishment is

situated or elsewhere.

4. The profits to be attributed to a permanent establishment shall be determined

on the basis of separate business books kept by the permanent establishment. If such

books do not constitute an adequate basis for the purposes of determining the profits

of the permanent establishment, then such profits may be determined on the basis of

an apportionment of the total profits of the enterprise to its various parts. The

method of apportionment adopted shall, however, be such that the result shall be in

accordance with the principles embodied in this Article. If necessary, the competent

authorities of the Contracting States shall endeavour to agree on the method for

apportioning the profits of the enterprise.

5. No profits shall be attributed to a permanent establishment by reason of the

mere purchase by that permanent establishment of goods or merchandise for the

enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to

the permanent establishment shall be determined by the same method year by year

unless there is good and sufficient reason to the contrary.

Where profits include items of income which are dealt with separately in

other Articles of this Agreement, then the provisions of those Articles shall not be

affected by the provisions of this Article.

ARTICLE 8

International Traffic

1. Profits from the operation of ships, boats, aircraft, railway or road vehicles

in international traffic shall be taxable only in the Contracting State in which the

place of effective management of the enterprise is situated.

2. If the place of effective management of a shipping enterprise is aboard a

ship or boat, then it shall be deemed to be situated in the Contracting State in which

the home harbour of the ship or boat is situated, or, if there is no such home harbour,

in the Contracting State of which the operator of the ship or boat is a resident.

3. The provisions of paragraph 1 shall also apply to profits from the

participation in a pool, a joint business or an international operating agency.

4. Notwithstanding the provisions of paragraph 1 of this Article and of Article

7, the profits derived by an enterprise of a Contracting State from the operation of

ships, boats, aircraft, railway or road vehicles used mainly for transport exclusively

between places situated in a Contracting State are taxable in that State.

ARTICLE 9

Associated Enterprises

1. Where -

(a) an enterprise of a Contracting State participates directly or indirectly in

the management, control or capital of an enterprise of the other

Contracting State, or

(b) the same persons participate directly or indirectly in the management,

control or capital of an enterprise of a Contracting State and an

enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in

their commercial or financial relations which differ from those which would be made

between independent enterprises, then any profits which would, but for those

conditions, have accrued to one of the enterprises, but, by reason of those conditions,

have not so accrued, may be included in the profits of that enterprise and taxed

accordingly.

2. Where a Contracting State includes in the profits of an enterprise of that

State, and taxes accordingly, profits on which an enterprise of the other Contracting

State has been charged to tax in that other State and the profits so included are

profits which would have accrued to the enterprise of the first-mentioned State if the

conditions made between the two enterprises had been those which would have been

made between independent enterprises, then that other State shall make an

appropriate adjustment to the amount of the tax charged therein on those profits. In

determining such adjustment, due regard shall be had to the other provisions of this

Agreement and the competent authorities of the Contracting States shall if necessary

consult each other.

ARTICLE 10

Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a

resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of

which the company paying the dividends is a resident and according to the law of

that State, but

(a) where the dividends are paid by a company resident of Romania to a

resident of Malta who is the beneficial owner thereof, the Romanian tax

so charged shall not exceed 5 per cent of the gross amount of the

dividends;

(b) where the dividends are paid by a company which is a resident of Malta

to a resident of Romania who is the beneficial owner thereof, the Malta

tax so charged shall not exceed that chargeable on the company paying

the dividends in respect of the profits so distributed and in any case

shall not exceed 30 per cent of the gross amount of the dividends.

The competent authorities of the Contracting States shall by mutual

agreement settle the mode of application of these limitations.

This paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.

3. The term "dividends" as used in this Article means income from shares,

"jouissance" shares, or "jouissance" rights, mining shares, founders’ shares or other

rights, not being debt-claims, participating in profits, as well as income from other

corporate rights which is subjected to the same taxation treatment as income from

shares by the laws of the State of which the company making the distribution is a

resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner

of the dividends, being a resident of a Contracting State, carries on business in the

other Contracting State of which the company paying the dividends is a resident,

through a permanent establishment situated therein, or performs in that other State

independent personal services from a fixed base situated therein, and the holding in

respect of which the dividends are paid is effectively connected with such permanent

establishment or fixed base. In such case the provisions of Article 7 or Article 15, as

the case may be, shall apply.

5. Where a company which is a resident of a Contracting State derives profits

or income from the other Contracting State, that other State may not impose any tax

on the dividends paid by the company except insofar as such dividends are paid to a

resident of that other State or insofar as the holding in respect of which the dividends

are paid is effectively connected with a permanent establishment or a fixed base

situated in that other State, nor subject the company’s undistributed profits to a tax

on the company’s undistributed profits, even if the dividends paid or the

undistributed profits consist wholly or partly of profits or income arising in such

other State.

ARTICLE 11

Interest

1. Interest arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which

it arises and according to the laws of that State, but if the recipient is the beneficial

owner of the interest, the tax so charged shall not exceed 5 per cent of the gross

amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a

Contracting State shall be exempt from tax in that State if it is derived and

beneficially owned by the Government of the other Contracting State, or a

territorial-administrative unit thereof or any agency or bank unit or institution of that

Government, or a territorial administrative unit or if the debt-claims of a resident of

the other Contracting State are warranted, insured, or directly or indirectly financed

by a financial institution wholly owned by the Government of the other Contracting

State.

4. The term "interest" as used in this Article means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a right

to participate in the debtor’s profits, and in particular, income from government

securities and income from bonds or debentures, including premiums and prizes

attaching to such securities, bonds or debentures. Penalty charges for late payment

shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraph 1 and 2 shall not apply if the beneficial owner

of the interest, being a resident of a Contracting State, carries on business in the

other Contracting State in which the interest arises, through a permanent

establishment situated therein, or performs in that other State independent personal

services from a fixed base situated therein, and the debt-claim in respect of which

the interest is paid is effectively connected with such permanent establishment or

fixed base. In such case the provisions of Article 7 or Article 15, as the case may be,

shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is

that State itself, a territorial-administrative unit or a resident of that State. Where,

however, the person paying the interest, whether he is a resident of a Contracting

State or not, has in a Contracting State a permanent establishment or fixed base in

connection with which the indebtedness on which the interest is paid was incurred,

and such interest is borne by such permanent establishment or fixed base, then such

interest shall be deemed to arise in the State in which the permanent establishment or

fixed base is situated.

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 paid, 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 Agreement.

ARTICLE 12

Commission

1. Commission arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

2. However, such commission may also be taxed in the Contracting State in

which it arises and according to the laws of that State, but if the recipient is the

beneficial owner of the commission, the tax so charged shall not exceed 10 per cent

of the gross amount of the commission.

3. The term "commission" as used in this Article means a payment made to a

broker, a general commission agent or to any other person assimilated to a broker or

agent by the taxation law of the Contracting State in which such commission arises.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner

of the commission, being a resident of a Contracting State, has, in the other

Contracting State in which the commission arises, a permanent establishment or a

fixed base with which the activity giving rise to the commission is effectively

connected. In such case, the provisions of Article 7 or Article 15, as the case may be,

shall apply.

5. Commission shall be deemed to arise in a Contracting State when the payer

is that State itself, a territorial-administrative unit or a resident of that State. Where,

however, the person paying the commission, whether he is a resident of a

Contracting State or not, has in a Contracting State a permanent establishment in

connection with which the activities for which the payment is made was incurred,

and such commission is borne by such permanent establishment, then such

commission shall be deemed to arise in the Contracting State in which the permanent

establishment is situated.

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

commission, having regard to the activities 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 that 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 Agreement.

ARTICLE 13

Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which

they arise and according to the laws of that State, but if the recipient is the beneficial

owner of the royalties, the tax so charged shall not exceed 5 per cent of the gross

amount of the royalties.

3. The term "royalties" as used in this Article means payments or credits,

whether periodical or not, and however described or computed, to the extent to

which they are made as consideration for

(a) the use of, or the right to use, any copyright, patent, design or model,

plan, secret formula or process, trademark or other like property or

right;

(b) the supply of scientific, technical, industrial or commercial knowledge

or information;

(c) the supply of any assistance that is ancillary and subsidiary to, and is

furnished as a means of enabling the application or enjoyment of, any

such property or right as is mentioned in sub-paragraph (a), or any such

knowledge or information as is mentioned in sub-paragraph (b);

(d) the use of, or the right to use

(i) motion picture films;

(ii) films or video tapes for use in connection with television; or

(iii) tapes for use in connection with radio broadcasting; or

(e) total or partial forbearance in respect of the use or supply of any

property or right referred to in this paragraph.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner

of the royalties, being a resident of a Contracting State, carries on business in the

other Contracting State in which the royalties arise, through a permanent

establishment situated therein, or performs in that other State independent personal

services from a fixed base situated therein, and the right or property in respect of

which the royalties are paid is effectively connected with such permanent

establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as

the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is

that State itself, a territorial-administrative unit or a resident of that State. Where,

however, the person paying the royalties, whether he is a resident of a Contracting

State or not, has in a Contracting State a permanent establishment or a fixed base in

connection with which the liability to pay the royalties was incurred, and such

royalties are borne by such permanent establishment or fixed base, then such

royalties shall be deemed to arise in the State in which the permanent establishment

or fixed base is situated.

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 Agreement.

ARTICLE 14

Income from the Alienation of Property

1. Income or gains from the alienation of immovable property, as defined in

paragraph 2 of Article 6, may be taxed in the Contracting State in which such

property is situated.

2. Income or gains from the alienation of movable property forming part of the

business property of a permanent establishment which an enterprise of a Contracting

State has in the other Contracting State or of movable property pertaining to a fixed

base available to a resident of a Contracting State in the other Contracting State for

the purpose of performing independent personal services, including such income or

gains from the alienation of such a permanent establishment (alone or together with

the whole enterprise) or of such fixed base, may be taxed in the other State.

3. Income or gains from the alienation of ships, boats, aircraft, railway and

road vehicles operated in international traffic or movable property pertaining to the

operation of such means of transportation shall be taxable only in the Contracting

State in which the place of effective management of the enterprise is situated.

4. Income or gains from the alienation of shares in a company, the assets of

which consist wholly or principally of immovable property, may be taxed in the

Contracting State in which the assets or the principal assets of the company are

situated.

5. Income or gains from the alienation of any property other than that referred

to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which

the alienator is a resident.

ARTICLE 15

Independent Personal Services

1. Income derived by a resident of a Contracting State in respect of

professional services or other activities of an independent character shall be taxable

only in that State. However, such income may be taxed in the other Contracting State

in the following circumstances

(a) if he has a fixed base regularly available to him in the other Contracting

State for the purpose of performing his activities (in which case, only so

much of the income as is attributable to that fixed base may be taxed in

that other Contracting State); or

(b) if his stay in the other Contracting State is for a period or periods

amounting to or exceeding in the aggregate 183 days in any twelve

month period commencing or ending in the fiscal year concerned.

2. The term "professional services" includes especially independent scientific,

literary, artistic, educational or teaching activities as well as the independent

activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 16

Dependent Personal Services

1. Subject to the provisions of Articles 17, 19, 20, 21 and 22, salaries and other

similar remuneration derived by a resident of a Contracting State in respect of an

employment shall be taxable only in that State unless the employment is exercised in

the other Contracting State. If the employment is so exercised, such remuneration as

is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a

resident of a Contracting State in respect of an employment exercised in the other

Contracting State shall be taxable only in the first-mentioned State if

(a) the recipient is present in the other State for a period or periods not

exceeding in the aggregate 183 days in any twelve-month period

commencing or ending in the fiscal year concerned, and

(b) the remuneration is paid by, or on behalf of, an employer who is not a

resident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed

base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration

derived by a resident of a Contracting State in respect of an employment exercised

aboard a ship, boat, aircraft, railway or road vehicle operated in international traffic

may be taxed in the Contracting State in which the place of effective management of

the enterprise is situated.

ARTICLE 17

Directors’ Fees

Directors’ fees and other similar payments derived by a resident of one of the

Contracting States in his capacity as a member of the board of directors of a

company which is a resident of the other Contracting State may be taxed in that other

State.

ARTICLE 18

Entertainers and Sportsmen

1. Notwithstanding the provisions of Articles 15 and 16, income derived by a

resident of a Contracting State as an entertainer, such as a theatre, motion picture,

radio or television artiste, or a musician, or as a sportsman, from his personal

activities as such exercised in the other Contracting State, may be taxed in that other

State.

2. Where income in respect of personal activities exercised by an entertainer or

a sportsman in his capacity as such accrues not to the entertainer or sportsman

himself but to another person, that income may, notwithstanding the provisions of

Articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the

entertainer or sportsman are exercised.

3. Income derived from the activities performed within the framework of

exchanges established under cultural or sports agreements concluded between the

two Contracting States shall be exempt from tax.

ARTICLE 19

Pensions

1. Subject to the provisions of paragraph 2 of Article 20, pensions and other

similar remuneration paid to a resident of a Contracting State in consideration of

past employment shall be taxable only in that State of which he is a resident.

2. Notwithstanding the provisions of paragraph 1, pensions paid and other

payments made under the social security legislation of a Contracting State shall be

taxable only in that State.

ARTICLE 20

Government Service

1. (a) Remuneration, other than a pension, paid by a Contracting State or a

territorial-administrative unit thereof to an individual in respect of services rendered

to that State or unit shall be taxable only in that State.

(b) However, such remuneration shall be taxable only in the other Contracting

State if the services are rendered in that State and the individual is a resident of that

State who

(i)

is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of

rendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State or a

territorial-administrative unit thereof to an individual in respect of services rendered

to that State or unit shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if

the individual is a resident of, and a national of, that State.

3. The provisions of Articles 16, 17 and 19 shall apply to remuneration and

pensions in respect of services rendered in connection with any business carried on

by a Contracting State or a territorial-administrative unit thereof.

ARTICLE 21

Professors, Teachers and Researchers

1. A professor, a teacher or a researcher who makes a temporary visit to a

Contracting State for a period not exceeding two years for the purpose of teaching or

conducting research at a university, college, school or other educational institution,

and who is, or immediately before such visit was, a resident of the other Contracting

State shall be exempt from tax in the first-mentioned Contracting State in respect of

remuneration for such teaching or research.

2. This Article shall not apply to income from research if such research is

undertaken primarily for the private benefit of a specific person or persons.

ARTICLE 22

Students and Trainees

Payments which a student or a trainee who is or was immediately before visiting a

Contracting State a resident of the other Contracting State and who is present in the

first-mentioned Contracting State solely for the purpose of his education or training

receives for the purpose of his maintenance, education or training shall not be taxed

in that State, provided that such payments arise from sources outside that State.

ARTICLE 23

Other Income

1. Items of income of a resident of a Contracting State which are not expressly

mentioned in the foregoing Articles of this Agreement in respect of which he is

subject to tax in that State shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income

from immovable property as defined in paragraph 2 of Article 6, if the recipient of

such income, being a resident of a Contracting State, carries on business in the other

Contracting State through a permanent establishment situated therein, or performs in

that other State independent personal services from a fixed base situated therein, and

the right or property in respect of which the income is paid is effectively connected

with such permanent establishment or fixed base. In such case the provisions of

Article 7 or Article 15, as the case may be, shall apply.

ARTICLE 24

Elimination of Double Taxation

Double taxation shall be eliminated as follows

In the case of Romania, where a resident of Romania derives income or

items of income referred to in Articles 10, 11, 12 and 13, or profits, or gains or

income from the alienation of property which under the law of Malta and in

accordance with this Agreement may be taxed in Malta, Romania shall allow as a

credit against its tax on the income, items of income, profits, gains or on income

from the alienation of property an amount equal to the tax paid in Malta.

The amount of credit, however, shall not exceed the amount of Romanian tax on

that income, items of income, profits or gains, or on income from the alienation of

property computed in accordance with the taxation laws and regulations of Romania.

2. In the case of Malta, subject to the provisions of the law of Malta regarding

the allowance of a credit against Malta tax in respect of foreign tax, where, in

accordance with the provisions of this Agreement, there is included in a Malta

assessment income from sources within Romania, the Romanian tax on such income

shall be allowed as a credit against the relative Malta tax payable thereon.

3. For the purposes of allowance as a credit, the tax payable in Romania or

Malta, as the context requires, shall be deemed to include the tax which is otherwise

payable in a Contracting State but has been reduced or waived by that State under its

legal provisions for tax incentives.

ARTICLE 25

Non-Discrimination

1. The nationals of a Contracting State, whether or not residents of the

mentioned Contracting State, shall not be subjected in the other Contracting State to

any taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of that

other State in the same circumstances are or may be subjected.

2. The taxation on a permanent establishment which an enterprise of a

Contracting State has in the other Contracting State shall not be less favourably

levied in that other State than the taxation levied on enterprises of that other State

carrying on the same activities.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of

Article 11, paragraph 6 of Article 12, or paragraph 6 of Article 13 apply, interest,

commission, royalties and other disbursements paid by an enterprise of a

Contracting State to a resident of the other Contracting State shall, for the purpose of

determining the taxable profits of such enterprise, be deductible under the same

conditions as if they had been paid to a resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly

owned or controlled, directly or indirectly, by one or more residents of the other

Contracting State, shall not be subjected in the first-mentioned State to any taxation

or any requirement connected therewith which is other or more burdensome than the

taxation and connected requirements to which other similar enterprises of that first-

mentioned State are or may be subjected.

5. Nothing in this Article shall be construed as obliging a Contracting State to

grant to individuals who are residents of the other Contracting State any personal

allowances, reliefs and reductions for tax purposes on account of civil status, family

responsibilities or any other personal circumstances which it grants to its own

residents.

ARTICLE 26

Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with the provisions

of this Agreement, he may, irrespective of the remedies provided by the domestic

law of those States, present his case to the competent authority of the Contracting

State of which he is a resident or, if his case comes under paragraph 1 of Article 25,

to that of the Contracting State of which he is a national. The case must be presented

within three years from the first notification of the action resulting in taxation not in

accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if it is not itself able to arrive at a

satisfactory solution, to resolve the case by mutual agreement with the competent

authority of the other Contracting State, with a view to the avoidance of taxation

which is not in accordance with the Agreement. Any agreement reached shall be

implemented notwithstanding any time limits in the domestic law of the Contracting

States.

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 the Agreement. They may also consult together for

the elimination of double taxation in cases not provided for in the Agreement.

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

1. The competent authorities of the Contracting States shall exchange such

information as is necessary for carrying out the provisions of this Agreement or of

the domestic laws of the Contracting States concerning taxes covered by the

Agreement insofar as the taxation thereunder is not contrary to the Agreement. The

exchange of information is not restricted by Article 1. Any information received by a

Contracting State shall be treated as secret in the same manner as information

obtained under the domestic laws of that State and shall be disclosed only to

authorities (including courts and administrative bodies) involved in the assessment

or collection of, the enforcement or prosecution in respect of, or the determination of

appeals or the prevention of fiscal evasion in relation to, the taxes covered by the

Agreement. Such authorities shall use the information only for such purposes. They

may disclose the information in public court proceedings or in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as to impose

on a Contracting State the obligation

(a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the

normal course of the administration of that or of the other Contracting

State;

(c) to supply information which would disclose any trade, business,

industrial, commercial or professional secret or trade process, or

information, the disclosure of which would be contrary to public policy

(ordre public).

ARTICLE 28

Members of Diplomatic Missions and Consular Posts

Nothing in this Agreement shall affect the fiscal privileges of members of

diplomatic missions or consular posts under the general rules of international law or

under the provisions of special agreements.

ARTICLE 29

Entry into Force

1. The Contracting States shall notify each other that the constitutional

requirements for the entry into force of this Agreement have been complied with.

2. This Agreement shall enter into force thirty days after the date of the later of

the notifications referred to in paragraph 1 and its provisions shall have effect in

respect of taxes on income derived during any calendar year or accounting period, as

the case may be, beginning on or after the first day of January immediately following

the date on which the Agreement enters into force.

ARTICLE 30

Termination

This Agreement shall remain in force until terminated by a Contracting State.

Either Contracting State may terminate the Agreement, through diplomatic channels,

by giving notice of termination at least six months before the end of any calendar

year beginning after the expiration of a period of five years from the date of its entry

into force. In such event, the Agreement shall cease to have effect in respect of taxes

on income derived during any calendar year or accounting period, as the case may

be, beginning on or after the first day of January immediately following the date on

which the notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorised by their

respective Governments, have signed this Agreement.

DONE at Bucharest on the 30th November, 1995, in two original copies in the

Romanian and English languages, both texts being equally authentic. In case there is

any divergence of interpretation of the provisions of this Agreement, the English text

shall prevail.

JOHN DALLI

FLORIN GEORGESCU

FOR THE GOVERNMENT OF

FOR THE GOVERNMENT OF

MALTA

ROMANIA

PROTOCOL

At the moment of signing the Agreement between the Government of Romania

and the Government of Malta for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income, the two parties have

agreed upon the following provisions, which will form an integral part of the

Agreement

With reference to Article 2, article 76 of the Income Tax Act in Malta provides

that no double taxation agreement concluded by Malta shall apply to tax paid or

payable in Malta in accordance with the provisions of sub-article (13) of article 56 of

the Income Tax Act concerning the chargeable income of any person engaged in the

production of petroleum produced in Malta or any substantially similar provision

which is imposed after the date of signature of this Agreement.

With reference to Article 7, each Contracting State shall tax the profits from the

business of insurance in accordance with the provisions of its own law.

With reference to Article 10, under the Malta law in force, income tax paid or

payable by a company, as is referable to that part of its profits which is distributed

by way of dividends, is assimilated with the personal income tax of the shareholder

in receipt of such a dividend. In the shareholder’s hands the dividend is charged to

tax gross and the relevant amount of tax, so assimilated, is set off against the

shareholder’s tax liability on his income from all liable sources.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their

respective Governments, have signed this Protocol.

DONE in duplicate at Bucharest this 30th day of November, 1995, in the

Romanian and English languages, all texts being equally authentic. In case there is

any divergence of interpretation of the provisions of this Protocol, the English text

shall prevail.

JOHN DALLI

FLORIN GEORGESCU

FOR THE GOVERNMENT OF

FOR THE GOVERNMENT OF

MALTA

ROMANIA