The international double taxation occurs when one and the same taxable object is subject to taxation in two or more states, for one and the same time period. Legal means of disposal of such conflicts on international scale are tax Conventions, called international double tax. Tax regime of income obtained from activities carried in Romania shall be determined by means of harmonizing the Fiscal Code provisions with the articles of the international tax conventions. The paper aims at highlighting the international legal provisions in the field and their applicability within Romanian law framework.
Keywords: double taxation, legal provisions harmonization, fiscal law
With regard to the Convention of 23 July 1990 on the elimination of double taxation, one can see the need for both Member States and taxpayers to have more detailed rules for implementing the aforementioned Convention in an efficient manner. The necessity of developing a behavior code in tax matters, for Member States and taxpayers use, was identified among all parties implied. This Code of Conduct is a political commitment and does not affect in any perspective Member States' rights and obligations or Member States and communities' spheres of competence, which arise from the Treaty. Representatives of countries that participated in these negotiations have recognized that implementing a code of conduct to avoid double taxation, should not prevent seeking solutions process at a global level.
Without prejudice to Member States competence and to the community, the code of conduct aims at enforcing the Arbitration Convention and connected matters with regard to the mutual procedure as the double taxation conventions between states regulate. International double taxation takes place when the same object is subject to two or more taxes regulations, for the same period of time. The legal means of eliminating of such conflicts on international scale are represented by fiscal conventions, called international Double Taxation Avoidance Convention (DTAC)
The fiscal regime of incomes obtained in Romania is provided by corroboration of Fiscal Code provisions with the international fiscal conventions articles. Fiscal Code applies to the following subjects of fiscal law, which might be subject to double taxation: fiscal Romanian residents; citizens of states that don't have double taxation convention; persons to whom applies the more favorable tax amount. Double Taxation Avoidance Conventions apply to: residents of states with which Romania has signed DTAC, on presenting the fiscal residence certificate; with priority to the fiscal code, in cases where the tax amount is more favorable.
The legal grounds of juridical framework between fiscal code and Double Taxation Avoidance Convention are regulated in: Romania Constitution provisions with regard to international law and internal law: "article 11 (1) the Romanian State is obliged to fulfill as it is stated and in good manners the obligations under the Treaties, to which Romania is part of; (2) treaties ratified by the Parliament, according to law, are part of internal law; (3) when a treaty states unconstitutional clauses with regard to the Romanian Law, it shall be ratify unless the Constitutional provisions are modified;" Fiscal Code provisions.
On international scale, there are two draft conventions on which the double taxation avoidance convention is based: Organization for Economic Co-operation and Development (OECD) Model Double Taxation Convention, which stands for developed countries advantages; United Nations Model Double Taxation Convention that represents a compromise between the source principle and the residence principle, though it gives more weight to the source principle than does the OECD Model Convention. As a correlative to the principle of taxation at source the articles of the Model Convention are predicated on the premise of the recognition by the source country that (a) taxation of income from foreign capital would take into account expenses allocable to the earnings of the income so that such income would be taxed on a net basis, that (b) taxation would not be so high as to discourage investment and that (c) it would take into account the appropriateness of the sharing of revenue with the country providing the capital. …