The Government of the United States of America and the Government of the Socialist Republic of Romania, desiring to conclude a convention for the avoidance of double taxation of income and property and the prevention of fiscal evasion, have agreed as follows: 　　　　　　　　　　　 　ARTICLE 1 　　　　　　　　　　　 　Taxes Covered 　　(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. 　　　　　　　　　　　　　　　ARTICLE 2 　　　　　　　　　　　　　　General Definitions 　　(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. 　　　　　　　　　　　　　　ARTICLE 3 　　　　　　　　　　　　　Fiscal Residence 　　(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. 　　　　　　　　　　　　ARTICLE 4 　　　　　　　　　　General Rules of Taxation 　　(1) A resident of one of the Contracting States may be taxed by the other Contracting State on any income from sources within that other Contracting State and only on such income, subject to any limitations set forth in this Convention. 　　(2) The provisions of this Convention shall not be construed to restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded- 　　(a) By the laws of one of the Contracting States in the determination of the tax imposed by that Contracting State, or 　　(b) By any other agreement between the Contracting States. 　　(3) Notwithstanding any provisions of this Convention except paragraph (4), a Contracting State may tax its citizens or residents (as determined under Article 3 (Fiscal Residence)) as if this Convention had not come into effect. 　　(4) The provisions of paragraph (3) shall not affect: 　　(a) The benefits conferred by a Contracting State under Articles 17 (Social Security Payments), 21 (Relief from Double Taxation), 22 (Nondiscrimination), and 23 (Mutual Agreement Procedure); and 　　(b) The benefits conferred by a Contracting State under Articles 18 (Governmental Functions), 19 (Teachers), 20 (Students and Trainees), and 25 (Members of Diplomatic Missions and Consular Offices) upon individuals who are neither citizens of, nor have immigrant status in, that Contracting State. 　　(5) The competent authorities of the two Contracting States may prescribe regulations necessary to carry out the provisions of this Convention. 　　　　　　　　　　　　　　ARTICLE 5 　　　　　　　　　　　Permanent Establishment 　　(1) For the purpose of this Convention, the term "permanent establishment" means a fixed place of business through which the business of a resident of one of the Contracting States is wholly or partly carried on. 　　(2) The term "permanent establishment" includes but is not limited to: 　　(a) A branch; 　　(b) An office; 　　(c) A factory; 　　(d) A workshop; 　　(e) A warehouse; 　　(f) A mine, quarry, or other place of extraction of natural resources; and 　　(g) A construction or installation project which exists for more than 12-months. 　　(3) Notwithstanding paragraphs (1) and (2), a permanent establishment shall not include a fixed place of business used only for one or more of the following: 　　(a) The use of facilities for the purpose of storage, display, or delivery pursuant to a sales contract, of goods or merchandise belonging to the resident; 　　(b) The maintenance of a stock of goods or merchandise belonging to the resident for the purpose of processing by another person; 　　(c) The maintenance of a fixed place of business for the purpose of purchasing of goods or merchandise, or for collecting information, for the resident; 　　(d) The maintenance of a fixed place of business for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a preparatory or auxiliary character, for the resident; or 　　(e) The maintenance of a construction or installation project which does not exist for more than 12-months. 　　(4) A person acting in one of the Contracting States on behalf of a resident of the other Contracting State, other than an agent of an independent status to whom paragraph (5) applies, shall be deemed to give rise to a permanent establishment in the first-mentioned Contracting State if such person has, and habitually exercises in the first-mentioned Contracting State, an authority to conclude contracts in the name of that resident, unless the exercise of such authority is limited to the purchase of goods or merchandise for that resident. 　　(5) A resident of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because such resident engages in industrial or commercial activity in that other Contracting State through a broker, general commission agent, or any other agent of an independent status, where such broker or agent is acting in the ordinary course of his business. 　　(6) A resident of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because such resident sells at the termination of a trade fair or convention in such other Contracting State goods or merchandise which such resident displayed at such trade fair or convention. 　　(7) In determining whether a resident of one Contracting State has a permanent establishment in the other Contracting State there shall not be taken into account the fact that such resident may be related to either a resident of the other Contracting State or to any other person who engages in that other Contracting State. 　　(8) The principles set forth in paragraphs (1) through (7) shall also be applied in determining whether there is a permanent establishment in a State other than one of the Contracting States or whether a person other than a resident of one of the Contracting States has a permanent establishment in one of the Contracting States. 　　　　　　　　　　　　　　　ARTICLE 6 　　　　　　　　　　Income from Immovable Property 　　(1) Income from immovable property, including royalties and other payments in respect of the exploitation of natural resources and gains derived from the sale, exchange, or other disposition of such property or of the right giving rise to such royalties or other payments, may be taxed by the Contracting State in which such immovable property or natural resources are situated. For purposes of this Convention, interests on indebtedness secured by immovable property or secured by a right giving rise to royalties or other payments in respect of the exploitation of natural resources shall not be regarded as income from immovable property. 　　(2) Paragraph (1) shall apply to income derived from the usufruct, direct use, letting, or use in any other form of immovable property. 　　　　　　　　　　　　　　ARTICLE 7 　　　　　　　　　　　　　Business Profits 　　(1) Industrial or commercial profits of a resident of one of the Contracting States shall be exempt from tax by the other Contracting State unless the resident has a permanent establishment in that other Contracting State. If the resident has a permanent establishment in that other Contracting State, tax may be imposed by that other Contracting State on the industrial or commercial profits of the resident but only on so much of them as are attributable to the permanent establishment. 　　(2) Where a resident of one of the Contracting States has a permanent establishment in the other Contracting State, there shall in each Contracting State be attributed to the permanent establishment the industrial or commercial profits which would reasonably be expected to have been derived by it if it were an independent entity engaged in the same or similar activities under the same or similar conditions and dealing at arm's length with the resident of which it is a permanent establishment. 　　(3) In the determination of the industrial or commercial profits of a permanent establishment, there shall be allowed as deductions expenses which are reasonably connected with such profits, including executive and general administrative expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. 　　(4) No profits shall be attributed to a permanent establishment of a resident of one of the Contracting States in the other Contracting State merely by reason of the purchase of goods or merchandise by that permanent establishment, or by the resident of which it is a permanent establishment, for the account of that resident. 　　(5) Insurance or reinsurance premiums derived from sources within one Contracting State by a resident of the other Contracting State shall not be subject to income tax or any other tax in the first Contracting State unless such income is effectively connected with a permanent establishment of the resident in that Contracting State. 　　(6) The term "industrial or commercial profits" includes, but is not limited to, income derived from manufacturing, mercantile, banking, insurance, agricultural, fishing or mining activities, the operation of ships or aircraft, the furnishing of services, and the rental of tangible personal (movable) property. Such term does not include the performance of personal services by an individual either as an employee or in an independent capacity. Such term also includes any other income effectively connected with a permanent establishment which the recipient, being a resident of one of the Contracting States, has in the other Contracting State. 　　(7) To determine whether property or rights are effectively connected with a permanent establishment, the factors taken into account shall include whether the rights or property are used in or held for use in carrying on an activity giving rise to industrial or commercial profits through such permanent establishment and whether the activities carried on through such permanent establishment were a material factor in the realization of the income derived from such property or rights. For this purpose, due regard shall be given to whether or not such property or rights or such income were accounted for through such permanent establishment. 　　(8) Where industrial or commercial profits include items of income which are dealt with separately in other articles of this Convention, the provisions of those articles shall, except as otherwise provided therein, supersede the provisions of this article. 　　　　　　　　　　　　　　ARTICLE 8 　　　　　　　　　　　Shipping and Air Transport 　　(1) Notwithstanding Article 7 (Business Profits) and Article 13 (Capital Gains), income derived by a resident of one of the Contracting States from the operation in international traffic of ships or aircraft registered in that Contracting State and gains derived from the sale, exchange, or other disposition of ships or aircraft used in international traffic and which are registered in that Contracting State shall be exempt from taxation by the other Contracting State. 　　(2) For purposes of this article, income derived from the operation in international traffic of ships or aircraft includes- 　　(a) Income derived from the rental of ships or aircraft operated in international traffic if such rental income is incidental to other income described in paragraph (1); and 　　(b) Income derived from the use, maintenance, and lease of containers and other related equipment in connection with the operation in international traffic of ships or aircraft by the resident described in paragraph (1). 　　　　　　　　　　　　　ARTICLE 9 　　　　　　　　　　　　Related Persons 　　(1) Where a person subject to the taxing jurisdiction of one of the Contracting States and any other person are related and where such related persons make arrangements or impose conditions between themselves which are different from those which would be made between independent persons, any income, deductions, credits, or allowances which would, but for those arrangements or conditions, have been taken into account in computing the income (or loss) of, or the tax payable by, one of such persons, may be taken into account in computing the amount of the income subject to tax and the taxes payable by such person. 　　(2) Where a redetermination has been made by one Contracting State to the income of one of its residents in accordance with paragraph (1), then the other Contracting State shall, if it agrees with such redetermination, make a corresponding adjustment to the income of a person in such other Contracting State related to such resident. In the event the other Contracting State disagrees with such redetermination, the two Contracting States shall endeavor to reach agreement in accordance with the mutual agreement procedure in paragraph (2)(b) of Article 23 (Mutual Agreement Procedure). 　　(3) For purposes of this Convention, a person is related to another person if either person owns or controls directly or indirectly the other, or if a third person or persons own or control directly or indirectly both. For this purpose, the term "control" includes any kind of control, whether or not legally enforceable, and however exercised or exercisable. 　　　　　　　　　　　　　ARTICLE 10 　　　　　　　　　　　　　Dividends 　　(1) Dividends paid by a corporation of one of the Contracting States to a resident of the other Contracting State may be taxed by both Contracting States. 　　(2) The rate of tax imposed by the first-mentioned Contracting State on such dividends shall not exceed 10 percent of the gross amount of the dividend. 　　(3) Paragraph (2) shall not apply if the recipient of the dividends, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State and the shares with respect to which the dividends are paid are effectively connected with such permanent establishment. In such a case, paragraph (6) of Article 7 (Business Profits) shall apply.