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EU Warns Romania Over Discriminatory Dividend Taxation

The European Commission on Tuesday sent a letter of formal notice to Romania about its tax rules, under which dividends paid to foreign companies (outbound dividends) may be taxed more heavily than dividends paid to domestic companies (domestic dividends).
EU Warns Romania Over Discriminatory Dividend Taxation
06 mai 2008, 18:29, English
“The letter (…) concerns the taxation of dividends which are paid to companies, resident elsewhere in the EU or in the EEA/EFTA countries. Domestic dividends on participations of up to 15% of the shares are subject to a final withholding tax of 10%. On similar outbound dividends, Romania levies a withholding tax of 16%. Bilateral tax treaties may reduce that rate,” the Commission said in a statement.
 
The commission highlights the fact domestic dividends on participations of 15% or more are tax exempt. However, Romania levies a final withholding tax of 10% on dividends paid to companies headquartered in Norway and of 16% on similar outbound dividends paid to companies headquartered elsewhere in EEA/EFTA countries.
 
The EU officials also took second infringement steps against Spain and Portugal over their taxation rules and sent a formal letter to Bulgaria requesting information on the country’s taxation rules for outbound dividends.
 
The four member states are to reply within two months, the Commission said.