Article 1-3

(1)

The taxes which are the subject of this Convention are:

(a)

In the case of Romania, the income taxes imposed under Romanian law, in particular the income taxes imposed on:

(i)

wages, salaries, fees, copyrights, and income from any other source received by individuals;

(ii)

profits of mixed companies;

(iii)

enterprises other than mixed companies or state enterprises;

(iv)

agricultural activities;

(v)

rentals; and

(vi)

nonresidents.

(b)

In the case of the United States, the Federal income taxes imposed by the Internal Revenue Code (other than social insurance taxes imposed by chapters 2 and 21).

(2)

This Convention shall also apply to taxes substantially similar to those covered by paragraph (1) which are imposed in addition to, or in place of, existing taxes after the date of signature of this Convention.

(3)

For purposes of paragraph (5) of Article 7 (Business Profits), this Convention shall also apply to taxes other than income taxes imposed at the national level of a Contracting State on insurance and reinsurance premiums paid to a resident of the other Contracting State. For the purpose of Article 22 (Nondiscrimination), this Convention shall also apply to taxes of every kind imposed at the national, state, or local level.

(4)

The competent authorities of the Contracting States shall notify each other of any amendments of the tax laws referred to in paragraph (1) and of the adoption of any taxes referred to in paragraph (2) by transmitting the texts of any amendments on new statutes at least once a year.

(1)

In this Convention:

(a)

(i)

The term ``Romania'' means the Socialist Republic of Romania; and

(ii)

When used in a geographical sense the term ``Romania'' also includes:

(A)

The territorial sea thereof, and

(B)

The seabed and subsoil of the submarine areas adjacent to the coast thereof, but beyond the territorial sea, over which Romania exercises sovereign rights, in accordance with international law, for the purpose of exploration for and exploitation of the natural resources of such areas, but only to the extent that the person, property, or activity to which this Convention is being applied in connected with such exploration or exploitation.

(b)

(i)

The term ``United States'' means the United States of America; and

(ii)

When used in a geographical sense, the term ``United States'' means the states thereof and the District of Columbia. Such term also includes:

(A)

The territorial sea thereof, and

(B)

The seabed and subsoil of the submarine areas adjacent to the coast thereof, but beyond the territorial sea, over which the United States exercises sovereign rights, in accordance with international law, for the purpose of exploration for and exploitation of the natural resources of such areas, but only to the extent that the person, property, or activity to which the Convention is being applied is connected with such exploration or exploitation.

(c)

The term ``Contracting State'' means the United States or Romania, as the context requires.

(d)

The term ``person'' includes an individual, a partnership, a corporation, an estate, or a trust.

(e)

(i)

The term ``Romanian corporation'' means any juridical person, including a mixed corporation which is incorporated and organized under Romanian law or any other legal entity created under Romanian law which is treated as a juridical person according to Romanian taxation laws.

(ii)

The term ``United States corporation'' means a corporation, or any entity treated as a corporation for United States tax purposes, which is created or organized under the laws of the United States or any state thereof or the District of Columbia; and

(f)

The term ``competent authority'' means:

(i)

In the case of Romania, the Minister of Finance or his delegate, and

(ii)

In the case of the United States, the Secretary of the Treasury or his delegate.

(g)

The term ``tax'' means tax imposed by the United States or Romania, whichever is applicable, to which this Convention applies by virtue of Article 1 (Taxes Covered).

(h)

The term ``international traffic'' means any voyage of a ship or aircraft operated by a resident of one of the Contracting States except where such voyage is confined solely to places within a Contracting State.

(2)

Any other term used in this Convention and not defined in this Convention shall, unless the context otherwise requires, have the meaning which it has under the laws of the Contracting State whose tax is being determined. Notwithstanding the preceding sentence, if the meaning of such a term under the laws of one of the Contracting States is different from the meaning of the term under the laws of the other Contracting State, or if the meaning of such a term is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or to further any other purpose of this Convention, establish a common meaning of the term for purposes of this Convention.

(1)

In this Convention:

(a)

The term ``resident of Romania'' means:

(i)

A Romanian corporation (as defined in paragraph (l)(e)(i) of Article 2 (General Definitions)), or

(ii)

Any other person resident in Romania, but in the case of a partnership, estate, or trust only to the extent that the income derived by such person is subject to United States tax.

(b)

The term ``resident of the United States'' means:

(i)

A United States corporation (as defined in paragraph (1)(e)(ii) of Article 2 (General Definitions)), or

(ii)

Any other person resident in the United States, but in the case of a partnership, estate, or trust only to the extent that the income derived by such person is subject to United States tax.

(2)

Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States:

(a)

He shall be deemed to be a resident of that Contracting State in which he maintains his permanent home. If he has a permanent home in both Contracting States or in neither of the Contracting States, he shall be deemed to be a resident of that Contracting State with which his personal and economic relations are closest (center of vital interests)

(b)

If the Contracting State in which he has his center of vital interests cannot be determined, he shall be deemed to be a resident of that Contracting State in which he has a habitual abode;

(c)

If he has a habitual abode in both Contracting States or in neither of the Contracting States, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and

(d)

If he is a citizen of both Contracting States or of neither Contracting State, the competent authorities of the Contracting States shall settle the question by mutual agreement.

---

Next: Article 4-7
Up: The Convention
Previous: The Convention