Romania plans to gather transfer pricing details until August 2025

The Romanian National Agency for Fiscal Administration (ANAF) has announced a data collection initiative targeting over 2,700 large and medium taxpayers in Romania. This initiative, which runs until August 2025, focuses on intragroup transactions, royalties, and financing.

Regardless of the extent to which taxpayers receive formal requests, the initiative serves as an indication of ANAF's focus on these areas. The ANAF has historically scrutinized intragroup service purchases in general tax audits and transfer pricing audits in Romania.

The initiative does not constitute a formal tax audit or impose immediate tax liabilities but has raised some tax procedural concerns among taxpayers. Multinational enterprises operating in Romania should proactively review their intercompany flows, transfer pricing practices, and positions to ensure readiness for increased transparency and ANAF's focus on inbound intragroup services, royalties, and financing.

Key considerations for intragroup royalty transactions include demonstrating the existence and use of the licensed rights, the economic substance of the transaction, and the appropriateness of royalty charges based on the arm's-length principle. Similarly, key considerations for intercompany loans include borrower creditworthiness and debt reclassification risks that may trigger both corporate income tax and withholding tax consequences.

For intragroup service purchases, consideration should be given to substantiation of benefits, transparency, and traceability of the transactions. The collected data will be used for analytical purposes to support fiscal risk analyses by the ANAF.

Although no specific sanctions for non-compliance have been mentioned, based on legal provisions, sanctions cannot be ruled out. Affected entities should consult their tax advisors for assistance and help answering any further inquiries.

The initiative involves reporting inbound transactions involving services, royalties, and financing over the period 2020-2024 to an unprecedented level of detail by specific transaction type and year. The Alert was published by NTD's Tax Technical Knowledge Services group, with Carolyn Wright serving as the legal editor.

The ANAF has also increased its scrutiny of intragroup loans, and financing transactions are now systematically flagged in their risk-evaluation system. The initiative is part of a broader voluntary collaboration among public, civil society, and private actors aimed at cooperatively solving complex societal problems, promoting corporate social responsibility, and fostering sustainable development.

Taxpayers should start an internal review and readiness assessment in response to the ANAF initiative, focusing on reporting data to the required level of detail, addressing risk areas, and preparing for more-intense scrutiny during future tax and transfer pricing audits. It is also recommended that taxpayers continue monitoring official updates on the topic.

For further assistance, contacts and email addresses for the team at Ernst & Young Romania are available in the Tax News Update: Global Edition (GTNU) version of this Alert.