3. Taxation: where and when to pay taxes on wage income
In the case of an Italian worker detached from Italy to Romania under a secondment contract to work for a Romanian legal entity, the obligation to declare and pay tax on the wage income received from abroad is incumbent on the individual detached in Romania.
In order to determine the tax regime applicable to such salary income obtained by non-resident individuals detached to Romania, the provisions of Article 127 and paragraph 43 (4) of the Romanian Tax Code in conjunction with the provisions of the double taxation convention concluded between Romania and Italy must be taken into account.
As a general rule, wage income earned by non-resident individuals working in Romania is taxable if the individual is present in Romania for one or more periods exceeding in total 183 days in any period of the 12 consecutive months ending in the calendar year in question or in the period and under the conditions specified in the double taxation convention concluded between Romania and Italy and only if the individual proves his residence in Italy by means of a tax residence certificate issued by the competent Italian authority.
In addition, salary income earned by non-resident individuals working in Romania and present in Romania for a period of less than 183 days in any period of the 12 consecutive months ending in the calendar year in question or in the period and under the conditions specified in the double taxation convention concluded between Romania and Italy is taxable in Romania if at least one of the following conditions is met:
- The salary is paid by or on behalf of a resident employer;
- The salary is paid by a permanent establishment in Romania belonging to the non-resident employer.
If the non-resident individual, as a detached worker providing work in Romania, exceeds 183 days of actual presence in Romania or exceeds the period provided for in the double taxation agreements, he/she must pay tax from the first day he/she obtains income from the salaried activity carried out on Romanian territory.
With regard to the taxes owed by foreign workers detached on the territory of Romania for dependent activities carried out in Romania, another obligation for the non-resident individual is that provided by the Order of the Ministry of Public Finance 1099/2016, which determines the procedure for establishing tax residence in Romania: “the non-resident individual is obliged to register with the competent tax body the Questionnaire for establishing tax residence upon arrival in Romania, within 30 days from the date on which 183 days of presence in Romania are completed” (art. 14 OMFP 1099/2016).