On 1 November 2017, the Romanian Government approved the draft law for the ratification of pending income tax treaty with Bosnia and Herzegovina. The treaty was signed 6 December 2016 and, once in force and effective, will replace the 1986 tax treaty between Romania and the former Yugoslavia as it applies in respect of Bosnia and Herzegovina and Romania.
The treaty covers Bosnia and Herzegovina individual income tax and enterprise profit tax, and covers Romanian tax on income and tax on profit.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State
Both countries apply the credit method for the elimination of double taxation.
The treaty will enter into force 30 days after the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force. Once in force and effective, the 1986 tax treaty between Romania and the former Yugoslavia will cease to apply in respect of Bosnia and Herzegovina and Romania.
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