The transfer pricing file is a record that large taxpayers are required to prepare annually, and small and medium taxpayers, by law, at the request of the tax agency during a tax audit.
With the help of the transfer price documentation, the price at which transactions are carried out with affiliated companies is documented and argued.Depending on the completeness and adequacy of the information contained in the documentation in proving factually that a pricing policy is not practiced, the Romanian Tax Authority decides whether to accept or adjust the prices charged by the taxpayer.
Romanian transfer pricing legislation in 2022 distinguishes between two categories of taxpayers:
1. For large taxpayers, it is mandatory to prepare annual transfer pricing documentation before filing the annual profit tax return
The obligation arises if transactions entered into with related persons exceed one of the following significance thresholds, excluding VAT:
200,000 euros, in the case of interest received/paid for financial services, calculated at the exchange rate communicated by BNR valid for the last day of the fiscal year;
250,000 euros, in the case of transactions related to services received/lent, calculated at the exchange rate communicated by BNR valid for the last day of the fiscal year;
350,000 euros, in the case of transactions related to the purchase and sale of tangible or intangible assets, calculated at the exchange rate communicated by BNR valid for the last day of the fiscal year.
The case file can be requested: as part of a tax assessment or to ascertain the state of affairs, according to the articles of the Code of Tax Procedure that regulate the taxpayer’s obligation to inform (Art. 58) and the submission of documents (Art. Article No. 64) .
Submission deadline: maximum of 10 calendar days from the date of the request or the deadline set for drafting
2. Provisions generally applicable to medium and small taxpayers
Large taxpayers whose transactions do NOT meet the above significance thresholds, as well as medium and small taxpayers, prepare the transfer pricing file upon request from the Internal Revenue Service if annual transactions with related parties exceed the following significance thresholds, net of V.A.T:
50,000 euros, in the case of interest received/paid for financial services, calculated at the exchange rate communicated by BNR valid for the last day of the fiscal year;
50,000 euros, in the case of transactions related to services received/lent, calculated at the exchange rate communicated by BNR valid for the last day of the fiscal year;
100,000 euros, in the case of transactions related to the purchase/sale of tangible or intangible assets, calculated at the exchange rate communicated by BNR valid for the last day of the fiscal year.
Taxpayers who engage in transactions with related persons with a total annual value below the significance thresholds set forth above will document compliance with the market value principle in accordance with the general rules set forth in current financial-accounting and tax regulations.
The file can be requested: during a tax audit.
The deadline for submission: between 30 and 60 calendar days from the date of the request, with the possibility of extension once, for no more than 30 days.
Penalties:
According to current regulations, failure to submit or incomplete submission of transfer price documentation as required by the Romanian Revenue Agency and within the legal deadlines may result in the application of a contravention penalty depending on the type of request and the taxpayer, thus for:
Preparation and submission request issued in tax assessment:
– Penalties of 12,000 to 14,000 lei in the case of medium and large taxpayers;
– Penalties of 2,000 to 3,500 lei for other taxpayers and individuals.
submission request issued outside of a tax inspection action:
– Penalties of 25,000 to 27,000 lei for large taxpayers who are obliged to prepare the file annually (obligation to provide the inspection body with the required documents) for not submitting it upon request of the inspection body.
