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Double Tax Treaties in Moldova

double tax treaty or a double tax agreement is a convention between two jurisdictions for the avoidance or the reduction of double taxation. These types of treaties will cover a wide array of types of taxes, from income taxes both on personal and on corporate income to inheritance taxes and many others.

Moldova is a country that has signed a number of double tax treaties with other jurisdictions and in this article, our team of agents who specialize in company incorporation in Moldova lists these countries and the main provisions of the treaties.

Please remember that the double tax treaty signed with a jurisdiction of interest can have different provisions, especially in terms of the taxes covered for the other signatory state. This is why we recommend reaching out to one of our agents when establishing the tax strategy for a branch or a subsidiary in Moldova. The provisions of these treaties can influence the overall taxation regime for a given company and our team of company formation agents in Moldova can help clarify the process. 

What double tax treaties has Moldova signed?

Moldova has signed approximately 50 double tax treaties with countries worldwide. These include the following: the Republic of Albania, the Republic of Armenia, the Republic of Austria, the Republic of Azerbaijan, the Republic of Belarus, the Kingdom of Belgium, Bosnia and Herzegovina, the Republic of Bulgaria, Canada, the People’s Republic of China, the Czech Republic, the Republic of Croatia, the Republic of Estonia, Finland, the Federal Republic of Germany, the Hellenic Republic, Ireland, Israel, the Republic of Hungary, Japan, the Republic of Kazakhstan, Kyrgyzstan, the Republic of Latvia, the Republic of Lithuania, Luxembourg, the Republic of Macedonia, the Republic of Montenegro, the Kingdom of the Netherlands, the Republic of Poland, Portugal,  Romania, the Russian Federation, the Republic of Serbia, the Republic of Slovakia, Spain,  the Swiss Confederation, the Republic of Tajikistan, the Republic of Turkey, Ukraine, the Republic of Uzbekistan, the Republic of Slovenia, State of Israel, and the Sultanate of Oman.

Many more drafts of tax avoidance agreements are waiting for approval before being ratified and put into practice.

Even though is not a very large network of treaties, the Moldavian government is aware of the impact that these treaties can have on the economic market. Foreign investors can set up a company in Moldova knowing that the provisions of the double tax treaties will allow for protection against the double taxation of the same profit (both in Moldova, where a subsidiary may be located, for example, and in the country of origin that is another signatory state).

The types of taxes for which a double tax treaty will generally apply to in case of Moldova are the following:

  • – the corporate income tax: the standard corporate income tax in Moldova which is 12%.
  • – the personal income tax: the personal income tax also has a 12% rate in the country.
  • – the tax on immovable property: the real property tax which may not be less than 50% of the maximum legal rate.
  • – others: any other taxes imposed in place of or in addition to the taxes mentioned above.

One of our agents can provide more details about any specific provisions as well as the laws set forth by the Ministry of Finance

How are double tax treaties implemented in Moldova?

Moldova is usually using the credit method to avoid double taxation. According to it, the incomes of a company with foreign participation are taxed in Moldova and the resident country is offering a refund for the amount. An important fact related to this method is that the claimed amount of money cannot be higher than the amount that could have been resulted after taxing the same amount of income in the resident country.

Moldova has also signed tax information exchange agreements. According to these treaties, Moldova must provide lists with the taxpayers to the willing partners and also receive this type of information from its partners. This way, the entrepreneurs wanting to take advantage of the double tax treaties regulations and not paying any taxes in Moldova and abroad are discouraged.

If an entity wants to claim a refund, he must bring a certificate of residence in another country and a proof that the taxes are already paid there (usually where the business takes place).

The list below highlights some of the reduced withholding tax rates that apply according to the double tax treaties signed with several countries. Please remember that our agents who specialize in company incorporation in Moldova can provide more details, as needed. We can also assist with VAT registration in Moldova.

  • – 6% or 15%: the usual withholding tax on dividends when no treaty applies;
  • – 12%: the usual withholding tax on interest and royalties when no treaty applies;
  • – 5 and 10%: the withholding tax for dividends under the treaty with Albania;
  • – 15%: the withholding tax for dividends and interest (royalties are under a 0% rate) according to the treaty with Belgium.

Investors can contact our agents for more information on how to set up a company in Moldova and how they can benefit from the double tax treaty regime, if applicable.

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