Romania heightens TP documentation scrutiny for multinationals

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Romania heightens TP documentation scrutiny for multinationals

Sponsored by

EY_Logo_Beam_STFWC_Horizontal_Large_RGB_OffBlack_Yellow_EN.gif
intl-updates-small.jpg

In January 2019, Romania's General Antifraud Directorate (DGAF) initiated a significant number of operative controls regarding transfer pricing (TP) documentation.

As a result of these operative anti-fraud control initiatives, the National Administration of Fiscal Administration (NAFA) announced in the same month that they will perform an extensive audit of the largest companies based in Romania, in all areas of activity.

Operation Iceberg

In its communication, the NAFA stated that the main object of Operation Iceberg is:

"Combatting profit externalisation, verifying the way in which large companies manage the economic relationship between companies in their group and dismantling transactional chains organised for the purpose of evading tax obligations by identifying and instrumenting tax fraud phenomena with significant negative implications on the state budget."

Following the risk evaluation, the NAFA noted that it has already initiated the tax audit at 80 taxpayers, with an estimated risk value of approximately €60 million ($67 million).

Transfer pricing adjustments

This comes as no surprise, as the regular practice of the DGAF during operative anti-fraud controls is to request transfer pricing (TP) documentation, even if the entitlement for requesting such documentation during an anti-fraud control is questioned.

Thus, it can be concluded that Operation Iceberg represents a mechanism by the tax authorities to perform significant TP adjustments.

Nevertheless, even if the recent tax audits are based on the risk evaluation resulting from anti-fraud operative controls, we can now expect the commencement of new tax audits that are based on the internal risk evaluation performed by specially designated tax inspectors from the NAFA.

Given the tendency of the NAFA to criminalise the failure of taxpayers to comply with Romanian tax legislation, Operation Iceberg will also "identify and instrument the phenomena of tax fraud".

It will also minimise the "significant negative implications on the state budget", because non-compliance with TP regulations usually translate into significant additional tax liabilities for the taxpayer.

It is expected that in the following months, the NAFA will increase tax audits to verify intra-group transactions because the tax authorities target is to verify a total of 487 large and medium-sized taxpayers in 2019.

more across site & shared bottom lb ros

More from across our site

The US president also unveiled a new 50% levy on copper imports; in other news, a UK wealth tax proposal has been criticised by the Institute for Fiscal Studies
Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Grant Thornton’s Austria tax head likens his practice to an escape room, shares his football coaching ambitions, and explains why tax is cool
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 EMEA Tax Awards
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Asia-Pacific Tax Awards
The fates of pillars one and two hang in the balance after the US successfully threw its weight around in G7 and Canadian negotiations
Rafael Tena tells ITR about the ‘crazy’ Mexican market, ditching the hourly rate, and refusing to grow his fledgling firm in an ‘unstructured way’
It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
Gift this article