Foreigners who work in Romania will have to pay the Romanian state a tax on their income obtained outside Romania from the beginning of 2012, apart from their revenues obtained locally. The three-year exemption Romania had enforced in this area will come to an end.

Several conditions need to apply for foreigners to pay these taxes to the Romanian state. Their stay in Romania should be longer than 183 days and Romania should be the center of their vital interest, according to Stela Andrei of Ernst & Young.

Expats would thus pay tax on their revenues from rents, interests and other revenues from other countries.

Romania was among the few countries which gave the three-year exception period, unlike other countries, where foreigners pay tax on their abroad revenues from their first year of residence.

There are some categories of foreigners who will still be able to avoid paying the extra taxes: those who come from a country which has signed a treaty with Romania avoiding the double taxation. They will need to show a certificate of fiscal residency, and to start the procedures for obtaining it in due time.

'Moreover, the Romanian legislation states the residency applies to the full calendar year and cannot change mid way. Complications in applying the new regulation may occur in case the treaty or the national legislation of other countries allow partial residency,” according to Ernst & Young.

Revenues from abroad need to be declared by May 25, 2012.

LIST OF COUNTRIES THAT HAVE SIGNED A FISCAL TREATY WITH ROMANIA.

Corina Saceanu, corina@romania-insider.com