Convention Signed at Washington December 4, 1973; 　　Ratification Advised by the Senate of the United States of America November 18, 1975; 　　Ratified by the President of the United States of America December 15, 1975; 　　Ratified by the Socialist Republic of Romania January 31, 1975; 　　Ratifications Exchanged at Bucharest January 26, 1976; 　　Proclaimed by the President of the United States of America February 25, 1976; 　　Entered into Force February 26, 1976; 　　Effective January 1, 1974. GENERAL EFFECTIVE DATE UNDER ARTICLE 27: 1 JANUARY 1974 TABLE OF ARTICLES Article 1----------------------------------Taxes Covered Article 2 ---------------------------------General Definitions Article 3 ---------------------------------Fiscal Residence Article 4 ---------------------------------General Rules of Taxation Article 5 ---------------------------------Permanent Establishment Article 6 ---------------------------------Income from Immovable Property Article 7 ---------------------------------Business Profits Article 8 ---------------------------------Shipping and Air Transport Article 9 ---------------------------------Related Persons Article 10 -------------------------------Dividends Article 11 -------------------------------Interest Article 12 -------------------------------Royalties Article 13 -------------------------------Capital Gains Article 14 -------------------------------Independent Personal Services Article 15 -------------------------------Dependent Personal Services Article 16 -------------------------------Private Pensions and Annuities Article 17 -------------------------------Social Security Payments Article 18 -------------------------------Governmental Functions Article 19 -------------------------------Teachers Article 20 -------------------------------Students and Trainees Article 21 -------------------------------Relief from Double Taxation Article 22 -------------------------------Nondiscrimination Article 23 -------------------------------Mutual Agreement Procedure Article 24 -------------------------------Exchange of Information Article 25 -------------------------------Members of Diplomatic Missions and Consular Offices Article 26 -------------------------------Assistance in Collection Article 27 -------------------------------Entry into Force Article 28 -------------------------------Termination Letter of Submittal---------------------of 11 March, 1974 Letter of Transmittal-------------------of 28 March, 1974 The "Saving Clause"-------------------Paragraph 3 of Article 4 　　　　　　　　　　　　　　MESSAGE 　　　　　　　　　　　　　　FROM 　　　　　　　THE PRESIDENT OF THE UNITED STATES 　　　　　　　　　　　　　TRANSMITTING 　　THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF ROMANIA WITH RESPECT TO TAXES ON INCOME, SIGNED AT WASHINGTON ON DECEMBER 4, 1973 　　　　　　　　　　　　LETTER OF SUBMITTAL 　　　　　　　　　　　　　　　　　　　　　　　DEPARTMENT OF STATE, 　　　　　　　　　　　　　　　　　　　　　　　Washington, March 11, 1974. The PRESIDENT, The White House. 　　THE PRESIDENT: I have the honor to submit to you, with a view to its transmission to the Senate for advice and consent to ratification, the Convention between the Government of the United States of America and the Government of the Socialist Republic of Romania with Respect to Taxes on Income, signed at Washington on December 4, 1973. 　　The Convention deals mainly with Federal income taxes in the case of the United States and with generally equivalent income taxes specified in Article 1(1) (a) in the case of Romania. The provision relating to nondiscrimination applies, however, to taxes of every kind imposed at the national, state, or local level. 　　Largely because of Romania's extensive involvement in international commerce the Romanian tax system is relatively well developed with regard to foreign investors. The Romanian tax authorities are familiar with the concepts of income used in the United States and Western Europe and have had some experience in their application. It was, therefore, possible to conclude a convention which, as to the basic provisions governing the taxation of business income, personal service income and real property income, as well as the administrative provisions for exchanging tax information and resolving taxpayer complaints, is similar in all substantive respects to the conventions recently concluded between the United States and Western European countries such as Belgium, France and Norway. 　　Romania imposes withholding taxes on dividends, interest, royalties, rentals and technical service fees. The Convention establishes the present Romanian tax rate of 10 percent on dividends as an upper limit to the tax so that in combination with any likely corporate tax (now 30 percent) the total of Romanian taxes on corporate profits would be fully creditable against the United States corporate tax. On the other items of income, the Convention provides for a reduction in Romanian withholding taxesfrom 15 percent to 10 percent on interest (with exemption on interest paid on loans from, or guaranteed by, the Export-Import Bank or the Overseas Private Investment Corporation), and from 20 percent to 10 percent on copyright royalties, including films, and to 15 percent on industrial royalties. Under the Convention, the United States will observe the same limits with respect to withholding tax on dividends, interest and royalties. Moreover, equipment rentals are not to be subject to the Romanian withholding tax, but will be taxable only if connected with an office in Romania. 　　The Convention also eliminates a Romanian 25 percent tax on income derived by performers who will be treated under the personal services provisions of the Convention (Articles 14 and 15). 　　A technical memorandum explaining in detail the provisions and effect of the Convention is being prepared by the Department of the Treasury and will be submitted to the Senate Foreign Relations Committee for consideration in connection with the Convention. 　　Upon entry into force, this Convention will be effective from January 1, 1974, and will remain in force for a minimum period of five years. After the initial five-year period it will remain in force indefinitely until terminated by either State. 　　The Department of the Treasury, with the cooperation of the Department of State, was primarily responsible for the negotiation of this Convention. It has the approval of both Departments. Respectfully submitted, HENRY A. KISSINGER. Enclosure: Convention. 　　　　　　　　　　　LETTER OF TRANSMITTAL 　　　　　　　　　　　　　　　　　　　THE WHITE HOUSE, March 28, 1974. To the Senate of the United States: 　　I transmit herewith, for Senate advice and consent to ratification, the Convention between the Government of the United States of America and the Government of the Socialist Republic of Romania with Respect to Taxes on Income, signed at Washington on December 4, 1973. 　　The Convention was signed during the visit to the United States of the Romanian President, Nicolae Ceausescu. It is evidence of the continued improvement and expansion of United States-Romanian relations. 　　The primary purpose of this Convention is to promote economic and cultural relations between the two countries by removing many tax barriers. The convention follows generally the form and content of conventions recently concluded between this government and Western European countries. 　　I hope that the Senate will act favorably on this Convention at an early date. 　　　　　　　　　　　　　　　　　　　　　　　　　　　　RICHARD NIXON. 　　　　　BY THE PRESIDENT OF THE UNITED STATES OF AMERICA 　　　　　　　　　　　　　　A PROCLAMATION CONSIDERING THAT: 　　The Convention between the United States of America and the Socialist Republic of Romania with Respect to Taxes on Income was signed at Washington on December 4, 1973, the text of which Convention, in the English and Romanian languages, is hereto annexed; 　　The Senate of the United States of America by its resolution of November 18, 1975, two-thirds of the Senators present concurring therein, gave its advice and consent to ratification of the Convention; 　　The Convention was ratified by the President of the United States of America on December 15, 1975, in pursuance of the advice and consent of the Senate, and was ratified on the part of the Socialist Republic of Romania on December 23, 1974; 　　It is provided in Article 27 of the Convention that the Convention shall enter into force one month after the date of the exchange of instruments of ratification, with effectiveness with respect to income of calendar years or taxable years beginning on or after January 1, 1974; 　　The instruments of ratification of the Convention were exchanged at Bucharest on January 26, 1976, and accordingly the Convention enters into force on February 26, 1976, effective January 1, 1974; 　　NOW, THEREFORE, I, Gerald R. Ford, President of the United States of America, proclaim and make public the Convention, to the end that it shall be observed and fulfilled with good faith on and after February 26, 1976, by the United States of America and by the citizens of the United States of America and all other persons subject to the jurisdiction thereof. 　　IN TESTIMONY WHEREOF, I have signed this proclamation and caused the Seal of the United States of America to be affixed. 　　DONE at the city of Washington this twenty-fifth day of February in the year of our Lord one thousand nine hundred seventy-six and of the Independence of the United States of America the two hundredth. By the President: GERALD R. FORD HENRY A. KISSINGER Secretary of State