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September 28, 2022

EY analysis: Ukrainian citizens have additional tax obligations after six months of presence in Romania

Ukrainian citizens for whom it is found, following a point-by-point analysis, that they meet the conditions of the Romanian legislation to be classified as Romanian tax residents, will become taxable in Romania, on their global income, shows an analysis carried out by a consulting company.

“From a fiscal perspective, staying in Romania for a period of more than six months, more precisely more than 183 days, can be translated into additional fiscal obligations,” argue the authors of the analysis, Corina Mindoiu, Partner, Income Tax and Contributions social, EY Romania and Andra Ciotic (photo), Senior Manager, Income Tax and Social Contributions, EY Romania.

According to the EY consultants, tax residency in Romania entails the obligation to declare here and to tax accordingly any foreign income that the Ukrainian citizen could obtain, from the first day of presence here: either from the rental of a property owned outside Romania, or from the ownership and/or transfer of shares in foreign companies or other similar investments that the Ukrainian citizen might have.

“It is important to mention that staying in Romania, by establishing residence here, also attracts the qualification of the Ukrainian citizen as a taxpayer to the mandatory social insurance system in Romania – with possible additional payment obligations for personal income obtained from Romania and/or from outside Romania, as the case may be,” the authors of the analysis claim.

From the perspective of salary income, things are different. Thus, Ukrainian citizens employed in Romania owe both salary income tax and mandatory social contributions, for the salary activity carried out in our country, similar to a Romanian employee, without additional personal obligations, declaration or payment.

“This is exactly the case of the over 6,400 Ukrainian citizens registered on the payrolls of some Romanian companies, who appear in the statistics of the Ministry of Labour”, the consultants mention.

On the other hand, in the case of Ukrainian citizens who work in Romania, but are still paid by a Ukrainian employer, it should be noted that the obligations to declare and pay the tax obligations due in Romania, both from the perspective of income tax from wages, as well as the mandatory social contributions, fall only to the Ukrainian citizen.

“There is only one conclusion: there are no special exemptions from the general provisions of Romanian tax legislation for Ukrainian citizens who are refugees from the war. Moreover, the change of tax residence to the Romanian one, by fulfilling the specific conditions of the legislation, in conjunction with the provisions of the Convention for the Avoidance of Double taxation between Romania and Ukraine, attracts additional fiscal obligations for Ukrainian citizens settled in Romania,” the authors stated.

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