This content is from: Romania

Romania: Considerations on country-by-country reporting requirements

Adrian Rus and Gabriela Bancescu of EY Romania take a closer look at the transfer pricing compliance and reporting obligations for businesses operating in Romania.

Under BEPS Action 13, large multinational enterprises (MNEs) are required to prepare country-by-country (CbC) reports with aggregate data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which the MNE group operates. CbC reports should be shared among tax administrations in jurisdictions in which the MNE group operates, for use in high level transfer pricing and BEPS risk assessments.

Most often, a Romanian constituent entity is required to file a CbC report in Romania if:

  1. It is the ultimate parent entity of the MNE; or
  2. It is the surrogate parent entity, being appointed by the MNE as a sole substitute for the ultimate parent entity; or
  3. It is a constituent entity of the MNE and at the CbC report due date in Romania, no qualifying competent authority agreement regarding the automatic exchange of the CbC reports is activated between Romania and the jurisdiction in which the CbC report for the group is filed.

Based on the currently activated relationships for automatic exchange of CbC reports, Romania receives CbC reports only from the EU jurisdictions. Moreover, it is worth mentioning that under the multilateral competent authority agreement (MCAA) on the exchange of CbC reports, Romania notified its status as a non-reciprocal jurisdiction and, as such, will not receive CbC reports submitted to tax authorities in other jurisdictions.

Nevertheless, Romania has a legislative requirement for local filing as mentioned at point (iii) above and the Romanian constituent entity of the MNE, that is neither the ultimate parent entity or the surrogate parent entity, would still be required to file the CbC report in Romania. In this latter stance, the local filing obligation is waived only if the group has appointed a surrogate/designated entity for filing purposes at EU level.

Failure to comply with the Romanian CbC reporting rules shall potentially trigger the following penalties:

  • Penalty of up to approx. €10,000 ($12,100) for late submission of the CbC report or incorrect or incomplete submission of information; or
  • Penalty of up to approx. €21,000 in case of failure to submit the CbC report.

According to the OECD/G20 BEPS Project CbC Reporting - Compilation of Peer Review Reports (Phase 3), it is recommended for Romania to take steps for implementing processes or written procedures to ensure that the exchange of information is conducted in a manner consistent with the terms of reference relating to the exchange of information framework. Moreover, it is also recommended to ensure that the appropriate use condition is met as soon as possible (recommendations that remain unchanged since the 2017/2018 peer review).

Considering the Romanian CbC reporting requirements that are still in place, it is recommendable that MNEs perform an analysis to assess the appropriate CbC report filling and/or notification obligations in Romania.

These are important aspects in the overall context of the Romanian transfer pricing environment that has become highly litigious in recent years, with transfer pricing being a main target of the tax audits and many transfer pricing cases being settled in the Romanian courts, while some reach mutual agreement procedures.

According to the Romanian tax authorities, transfer pricing related actions are included among those considered by the authorities for fighting tax evasion. These include specific actions for identifying MNEs bearing a high transfer pricing risk and also undertaking specific transfer pricing risk analyses based on information received under the exchange of information mechanisms provided under the framework of OECD BEPS Actions 5 and 13 (including CbC reports received by the Romanian authorities).

From a practical perspective, it is unclear at this stage how the Romanian tax authorities are using and interpreting the CbC reporting information received for the purpose of undertaking transfer pricing risk assessments. Practical outcomes and effects for the MNEs operating in Romania are expected to be seen in the near future.


Adrian Rus
T: +40 724 204 966 

Gabriela Bancescu
T: +40 734 800 102

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