1. US International Tax Implications of Doing Business in Romania Charles T. Chongo, CPA January 13, 2011

2. 2 Ownership of a Romanian Company Key Tax Matters –Withholding Tax –Double Tax TreatyIRS Form 8802 & Certificate of Fiscal Residence Form 6166 –Foreign Tax Credit (Direct Tax Credit/Indirect Tax Credit) –Controlled Foreign Corporation Rules & Passive Foreign Investment Companies More than 50% US ownership by 10% US owners (Vote & Value) Active Trade or Business Requirement Subpart F (Foreign Personal Holding Company Income--Dividends, Interest, Rents & Royalties/Foreign Based Company Sales Rules)

3. 3 Ownership of a Romanian Company Practical Considerations –Qualified Dividends & Capital Gains (Stock Sales & Section 1248 Shareholders (10% or more ownership) –Cross Border Contracts (Services & Management Services Contracts who owns whatwhere is the value?) –Transfer Pricing & Arms Length Standard (Cost Plus Arrangements) –Individual Liability to Romanian Tax (183 days rule) –Tax ComplianceForm 5471/Form 5472 Form 926, Section 351 Statements, Section 1.6038b Statements, FBARs (TD F 90-22.1) –IRS Voluntary Disclosure Program

4. 4 Holding Companies Holding Company Structures –General Overview Requires Significant Business Commitment Low Effective Rate of Tax Good Tax Treaty Network EU Parent-Subsidiary Directive, Royalties & Interest Directive No Withholding Tax on Incoming and Outgoing Payments No Taxation of share sales or asset sales Cyprus, Luxembourg, Switzerland, Ireland, Netherlands, Bermuda/British Virgin Islands, Barbados –Intellectual Property Incubation/Active Trade or Business Requirements –US Inbound Structures

5. 5 Open DiscussionQ&A/ Other Areas of Interest