Romania - Georgia Tax Treaty

CONVENTION

BETWEEN THE GOVERNMENT OF GEORGIA AND THE

GOVERNMENT OF ROMANIA

PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

as follows:

Article j : PERSONAL SCOPE

This Convention shall apply to persons ¥ who 3 are residents of one or both of the Contracting States.

capital, including taxes :on gains ‘from ‘the -alienation -of ‘movable. or : immovable property, as well as taxes on capital appreciation.

3. The existing taxes to which this Convention shall apply are: 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 agricultural income, tv) the tax on dividends,

(hereinafter referred to as "Romanian tax").

b) In the case of Georgia: (i) the tax on profit (income) of the enterprises; (ii) the tax on property of the enterprises; (iii) the tax on Income of the individuals; (iv) the tax on property of the individuals.

the Contracting. ‘States shall notify each’ ‘other of : any substantial changes f which have been made in their respective taxation laws.

Article 3 GENERAL DEFINITIONS

1. For ‘the purposes of this Convention, unless ‘the context otherwise

Georgia, including the iriternal and territorial sea, ‘the exclusive economic: zone and continental shelf ‘over which Georgia, in accordance - ‘with | international law and national legislation, exercises its jurisdiction, — . sovereign rights and tax legislation;

d) the term "person" includes an individual, a company and any other body of persons legally set up in either of the Contracting States;

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 “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

othe laws in force i ini Romania.

(ti) in the case of Georgia any individual possessing :the nationality .of Georgia and any legal person, partnerships and associations deriving their status as such from the laws in force in Georgia;

h) the term “international traffic" means any transport by a ship, aircraft, railway or road vehicle operated by an enterprise which has its place of effective management in a Contracting State, except when such transport is operated 1seely. between places situated ir in the other Contracting State.

(ii) in the case2of. Georgia, the 1 Minister =r :0f Finance. OF. - his . authorized representative. - :

2. As regards the application of this Convention bya , Contracting § State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes~ to which the Convention applies.

Article 4 RESIDENT

|. For the purposes of this Convention, 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, and also includes that State and any local authority or administrative-territorial unit thereof. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

which he has ¢ a permanent home available to ‘hime if if he ‘haga perm en home available to him in both States, he shall be deemed to be a resident of ©

the State with which his personal and economic relations are closer (centre oy

of vital interests); a b) if the State in which he has his cerftre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State | in which he has an habitual abode;

c) if he has an habitual abode in both States or in neither f them, he shall

management is situated.

Article 5 PERMANENT ESTABLISHMENT

1. For the purposes of this Convention, 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;

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3. The term "permanent establishment" likewise encompasses: :

a) a building site, a construction, assembly or. installation ° project supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than nine months within

any twelve month period;

b) the furnishing of services, including consultancy services, by. an enterprise of a Contracting State through employees or other personnel engaged for « such Purpose in the other Contracting State, provided: ‘that ©

‘preceding /provisions fs t" shall be deemed fot:

enterprise solely for the p 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 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;

e) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

f) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; :

5, Notwithstanding the p ‘provisions of paragraphs 1 and 2, where t a person ® : other than an agent of an independent status to whom paragraph 7 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 4 which, if exercised through a fixed place of business,-.will not «make .this fixed. place .of business a. permanent establishment under the provisions of, that paragraph. Pet

a Contracting State merely because ‘it carries -on business «in that. State through a broker, ‘general commission agent ‘or any. -other sagent. ofan independent status, provided that such persons are acting in the ordinary course of their business.

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. fer at menncint ge cere ~f r x an - Ce FER

ne Hi property (inchiding in rom ‘agriculture or forestry) situated other Contracting State may be taxed i in that other State?

2. The term "immovable property" ‘shall have the n meaning which it t 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 landed property apply, usufruct of immovable property and rights to variable or fixed payments. as consideration for the working of,:or the right to work,

mineral deposits, sources :and other natural :resources; ships, aircraft,

railway and road vehicles. shall not bé regarded as immovable © property.

oF Article7° : 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 attribute 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 shail 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 ee ee amen coment toe + Anansi epi anlcRmE MHS rt “a pérmanent:establishtr allowed as ‘deductions expenses which are incurred. forthe pupae limitations under the TNomestc he law.

3. Insofar'as it has been customary ina Contracting State to determine the profits to be attributed to,a permanent establishment on the basis of an apportionment of the tei refs 0 of. the enterprise : ‘to its various pats ear by year crn there is oe and sufficient n Teason to the contrary.”

4. Where profits include items of income which are dealt with separately ine other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8 INTERNATIONAL TRAFFIC

|. Profits from the operation of ships, 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. The profits referred to in paragraph 1 of this Article shall not include profits derived from the operation of a hotel or from.a transport activity

“which the home h D harbour, inthe @ Contracting State of-Which the operator of th hip: is a resident.:. ween . Profits of an enterprise of a Contracting State from the use, maintenance or rental of containers (including trailers, barges and related equipment for the transport of containers) used for the transport of goods or merchandise shall be taxable only in that State, except where such containers are used for the transport of goods | or merchandise solely between n places within the indirectly in‘the management, control or capital ofa

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.

of the other Contracting State, or Ry _ 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 Convention and the competent authorities of the Contracting States shall if necessary consult each other. *

Article 10 _ DIVIDENDS

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 i 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 —

impose any. tax or é dividends paid by the company, except: 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. on debt-claim of the. Government of the’ other Contractin “State, ; National (Central) Bank or any other bank or -institution of: that“ “ Government, authorised to make, guarantee or insure credits on behalf of the Government of the other 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 paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries. on

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

exceeds’ the ainount: the beneficial: this Aiticl 5 excess part of:th : each Coneectne Sige eve ret’ being had to heath

Convention:

nich would have béen'a the absence. of such re

‘Article 12 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 beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shal! not exceed 5 per cent of the gross amount of the royalties.

3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright | of literary, artistic or scientific work, including computer software, . 4 ‘The provisions of sf 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 ns of Article 7 or Article 15; "as the case may be, shall I apply.

which they are paid,-exceeds the amount which would have been oeret 2 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 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. 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 i in 1 which such payment arises.

3. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the commission being a resident of a Contracting State, carries on business in the other Contracting State in which the commission: arises, through a permanent establishment situated therein, or, performs . dn fied. such commission is borne by such permanent establishment of: ‘fixed Sheet “ then such commission shall be deemed to arise in the Contracting State i in which the permanent establishment or fixed base is situated.

4. 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 shail 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.

Contracting State may be taxed i in that other State.

2. Gains from the alienation of movable ‘property. forming part’ 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 ‘gains «from the alienation of such a permanent establishment (alone or with the whole enterprise) « or of such fixed base, may be taxed i in that other. State.
3. Gains { from the alienation of any property other than that referred to in paragraphs | to 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 except in the following circumstances, when such income may also be taxed in the other Contracting State:

6. periods amounting to or exceeding in'the aggregate ‘183 days in any twelve month period commencing or ending in the calendar year concerned.

In the cases referred to in subparagraph’a) or b) the income may be ‘taxed in the other Contracting State but only so much of it as is attributable to the fixed base or is derived from the activities performed in: ‘the period in which the resident was present in that other: State.”

2. The term "professional | services scientific, literary, artistic, educational .independent activities of physi :

and accountants...”

. Le ‘Subject to the p provisions .other similar remuneration derived by. Si respect of an employment shall be taxable :only' employment is exercised in the other Contracting Stat 3 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 period of twelve months commencing or ending in the calendar 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 - :

international traffic shall be taxable only in the Contracting State in the place of effective management of the enterprise is situated.

Article 17 DIRECTORS' FEES

from his personal activities as such 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. The provisions of paragraphs | and 2 shall not apply to income derived from activities performed in a Contracting State by artistes or sportsmen if the visit to that State is wholly or mainly supported by public funds of one or both of the Contracting States or local authorities or administrative - territorial units thereof. In such a case, the income is taxable only in the Contracting State in which the artiste or the sportsman is a resident.

annuities and other similar remuneration paid t toa 5 resident ofa Contracting State in consideration of past employment shall be taxable only sin a State. . .

2. Notwithstanding the provisions of paragraph 1 of this ‘Article pensions ° and other similar payments made under the social security legislation ofa Contracting State shall be taxable only in that State.»

3. The term "annuity" means a stated sum payable periodically it stated - | times during life or during a specified or ascertainable pe co a commitment ..with an obligation to make. the -pa adequate and full consideration in money or money's

unit shall be taxable only i 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 local authority or an administrative-territorial unit thereof to an individual in respect of services rendered to that State or authority 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.

administrative-territorial unit thereof.

“Article 21 STUDENTS AND TRAINEES

Payments which a student, of an apprentice or: business, technical, agricultural or forestry 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 State solely for. the purpose of his education training shall not be taxed in that State, provided that such: from sources outside that State: The benefit : provided der this'p

isnmediately before making a visit to the other. Contracting § State and who, at the invitation of any university, college, school or ‘other ‘similar non- profitable educational institution, which is recongnised by the Government ~ of that other Contracting State, is present in that other Contracting State for a period not exceeding two years from the date of his first arrival in that other Contracting State, solely for the purpose of teaching or research or both, at such educational institution shall be exempt from tax in that other Contracting State on his remuneration for teaching or research.

2. The provisions of paragraph | of this Article shall not apply to income from research if such research is undertaken not in the public interest but for the private benefit of a specific person or persons.

3. However, any such income derived by a resident of a Contracti from sources in the other Contracting State may also be taxed in that other State.

4. The provisions of paragraph | stiall not apply to income, other than . income from immovable property as defined in paragraph 2 of Afticle 6 if

the recipient of such income, being a resident of a Co tract g State,

1. Capital ‘represented by immovable property. referred to owned by a resident of a Contracting State and which are ‘situated in th other Contracting State, may be taxed in that other State.- pe

2. Capital represented by 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 by 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, may be taxed in that other State.

3. Capital represented by ships, aircraft, railway and road vehicles operated by an enterprise of a Contracting State in international traffic, and movable property pertaining to the operation of such means of transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

ELIMINATION OF DOUBLE TAXATION

"Where a ‘resident of Contracting State-:derives income or owns capital - “which, in accordance with the provisions of this Convention may be taxed in the other Contracting State, the first mentioned State shall allow: .

a) asa deduction from the tax on the income of that resident, an amount equal to the income tax paid in that other State; ~

b) as a deduction from the tax on the capital. of that resident, an amount equal t to the capital t tax “paid in that other. S ao

Contracting State to any taxation or any require ent connected therewith which is other or more burdensome than thé taxation and - ‘connected. requirements to which nationals of that other State in : the : ‘same circumstances, in particular with respect to residence, 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 favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

purpose of determi taxable profits of such enterprise, be ded otibl under the same conditions as if they had been paid to a residen of th first mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted. 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 -

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 Convention, 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 | of Article 26, 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 Convention.

2. The competent authority shall endeavour, if the objection appears to it to be justified and 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 Convention. Any agreement reached shall be resolve :by : mutua greement any ‘difficulties or “doubts ‘arising as to the ~ interpretation o application of the Convention." They may also consult | together for the elimination of double taxation in cases not provided for in: the Convention:

3. 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 4 repress tatives of the competent authorities. of the Contracting States. °.

contrary to ‘the Con ention. The exchange of information is not restricted - by Article 1. ‘Any, vinfotmation received by-a “Contracting ‘State shal! be. treated as secret in‘the same manner as information obtained under the domestic laws of that State, and shall be disclosed only:to persons or ~ 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 in relation to, the taxes covered by the Convention. Such persons or 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 | 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; . n ithe “roe into > force of this Conv

on Ou!

notifications and shall thereupon have effect:

(a)

(b)

in respect of taxes withheld at the source to the 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

in respect of other taxes on profit, income and on capital derived on or after the first day of January in the calendar year next following the year in which the Convention enters into force.

OF GEORGIA

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