Romanian transfer pricing requirements

The related party transactions must follow the arm’s length principle when determining the taxable base
for Romanian subsidiaries of a Group.

Although Romania is not a member of the OECD, the Romanian Tax Code and the related Norms provide that, in
the application of transfer pricing rules, the Romanian Tax Authorities will also consider the OECD Guidelines, as
latest updated on January 2022, incorporating the results of the OECD BEPS 2015 Final Reports (issued as a
result of the OECD Action Plan on Base Erosion and Profits Shifting). In addition, the legislation also refers to the
EU Code of Conduct on transfer pricing documentation. On 25 January 2022, the OECD Council decided to open
accession discussions with Romania as well as five other countries, considering the criteria of like-mindedness,
significant player, mutual benefit, and global considerations, while also recognizing the progress made by these
countries toward fulfilling the criteria outlined in the Framework for Consideration of Prospective Members.
According with local transfer pricing rules, the Romanian taxpayers have the obligation to prepare the local
transfer pricing file in certain conditions and depending on the category of taxpayers.
Small / medium-size taxpayers (i.e., such as Baggerman BV SRL) performing related party transactions, excl.
VAT, higher than any of the thresholds set out below, have the obligation to prepare and present the transfer
pricing file only upon request of the tax authorities during a tax inspection:
• EUR 50,000, in the case of interest received/paid for financial services;
• EUR 50,000, in the case of transactions representing services rendered/received; and
• EUR 100,000, in the case of transactions representing purchase/sale of tangible or intangible
goods.
The deadline for the presentation of the transfer pricing file spans between 30 and 60 calendar days (usually
30 days), with the possibility of a single extension, upon the written request of the taxpayer (which may be
accepted or not), with a similar period of maximum 30 calendar days. However, please do note that this is a
short period of time for preparing the transfer pricing file taking into consideration all the information that must be
obtained and analyzed. However, the transfer pricing file may be requested in circumstances other than a tax
audit, more specifically based on the provisions of the Romanian Tax Procedural Code referring to the general
obligation of the taxpayers to provide information and present documents. This provision is applicable for the
transactions performed with related parties starting with the tax year 2016.
In this circumstance, it is advisable to prepare in advance TP local file for the statute of limitation (i.e., current
opened period for tax audit in Romania is FY2017 – FY2023), in order to identify any TP risks, if the case, and
take corrective measures. Small-medium size taxpayer are allowed to have a single transfer pricing file for the
entire non-documented period, not like the large size taxpayer which are obliged to have a single transfer pricing
file for each non-documented year.
In general, the Romanian local transfer pricing file is prepared by compiling the information, explanations and
documents received directly from the Company or from the Group. Additional information provided from the
group such us Masterfile, other local files, transfer pricing policies, economic analysis for intra-group
services, local benchmarking studies must be compiled in the format required by the Romanian law and
adjusted accordingly to the Romanian specific requirements.
Please note that the existence of a Masterfile prepared at Group level is useful, but not enough for
satisfying the local documentation mandatory requirements. Indeed, when preparing the local transfer
pricing documentation, the information presented in the group description section of the Masterfile is very
useful since according to the local TP regulations, the local transfer pricing file contains all the
information also listed in the Master File (based on OECD Guidelines). However, the local requirements in
respect of the structure of the TP file must be observed. Also, with reference to the comparability analyses, the
search strategy must be tailored to the local regulations.
The penalty for not presenting the TP file at the request of the Romanian tax authorities by small/medium
size taxpayers such as the Company ranges between RON 2,000 and RON 3,500 (i.e., between EUR 400
and EUR 700).
However, for not presenting the TP file / presenting the incomplete TP file, leads to the Romanian tax
authorities will proceed to estimate the related transfer prices. The estimation will be made only for the
transactions performed with affiliated entities for which the taxpayer did not provide the transfer pricing file or for
which the transfer pricing file was presented incompletely, thus not establishing the fact that transfer prices meet
arm’s length principle. As a result of the estimation, the related value of incomes or expenses is adjusted until
the profitability rate of the Company reaches the central market trend („median value”), thus may result in
additional 16% CIT and late payment interest and penalties.

Starting with 2017, Romanian entities part of a Group of companies (“constituent entities”) having
consolidated revenues higher than EUR 750 mil. Have the obligation to submit country-by-country
notification regarding the ultimate parent entity in charge with the submission of the report (“CbCR”) for
the entire Group. According to the local law, the CbCR notification is due by the last day for fiscal reporting of the
MNE Group’s, but no later than the deadline for filing a tax return for the respective constituent entity for the
preceding fiscal year (i.e., the Romanian corporate income tax refers to 25th June, where the fiscal year of the
company/Group is not different than the calendar one).
Where no agreement for exchange of information is in place between the jurisdiction of the ultimate parent
and Romania, allowing the exchange of information related to CbCR, the Romanian company has the
obligation to submit the CbCR in Romania. The deadline for the CbCR submission is on 12 months from the
end of the tax year concerned.
CbCR and CbC notification should be filled in by considering the specific format, using the software program made
available by the RTA, and are further submitted online with the RTA, by using the electronic signature available at
the level of the taxpayer.
The fine for late submission or transmission of incorrect or incomplete information of the CbCR is ranging
between RON 30,000 and RON 50,000 (approx. EUR 6,250 to EUR 10,500). The fine for not submitting the
CbCR is ranging between RON 70,000 and RON 100,000 (approx. EUR 14,500 to EUR 20,800).