The EU Public Country-by-Country Reporting Directive entered into force on December 21 2021 and EU member states have to transpose the directive into national legislation by June 22 2023. The first financial year of reporting will be the year starting on or after June 22 2024 at the latest.
In September 2022, Romania became the first EU member state to publish legislation transposing the EU Public CbCR Directive and to choose to implement the reporting early, as the rules will enter into force on January 1 2023.
The first publication will take place within 12 months from the date of the balance sheet of the first financial year and will need to be made available for five years (first publication will take place no later than December 31 2024, for a financial year that ends on December 31 2023).
Requirements for MNEs
The Romanian legislation requires Romanian-based multinational enterprises (MNEs) and non-EU-based MNEs (doing business in Romania through a qualifying branch or medium-sized or large subsidiary) with total consolidated revenue of more than €747,474,740 in each of the previous two financial years to disclose publicly information including:
The nature of activities;
Income taxes paid;
A breakdown of profits;
Revenues; and
Employees per country.
The report should be made accessible on the public registry of the relevant member state and on the company website free of charge for a minimum of five consecutive years or on the website of the local chamber of commerce (if made available free of charge).
In general, the rules under the Romanian legislation adhere to the general rules in the EU Public CbCR Directive. However, the wording of the Romanian legislation provides for an expansion of the scope as compared with the directive, as MNE groups that have a medium-sized or large subsidiary in Romania are subject to public CbCR in Romania, irrespective of whether these are non-EU or EU-headquartered groups. It is nevertheless expected that this expanded scope will be revised through an update of the legislation, though the timing of such revision is unknown.
In addition, Romania chose to allow in-scope groups to defer the disclosure of commercially sensitive information for up to five years subject to certain conditions, though any omission, together with a duly reasoned explanation, will be clearly indicated in the report. Sensitive information should be understood as information that, if made publicly available, would be seriously prejudicial to the commercial position of the MNE to which the report relates. Nevertheless, information for tax jurisdictions listed on the EU list of non-cooperative jurisdictions may not be omitted.
Furthermore, Romania opted to exempt companies from the requirement to publish the CbC reports on their website, provided that they are made available free of charge on the website of the relevant chamber of commerce.
The information in the report needs to be disclosed separately for all EU member states and all jurisdictions included in Annex I and Annex II of the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes. For all other jurisdictions, aggregated data is to be disclosed.
Early impact assessment
In the absence at this stage of detailed norms for the application of the Romanian public CbCR legislation, several questions are raised and potential difficulties may be encountered by those impacted by the legislation.
Nevertheless, the acceleration of the public CbCR obligations through the enacted legislative changes in Romania requires that MNEs with significant operations in Romania address and assess early the impact of the Romanian legislation on their business and on their broader public tax reporting strategy.
