Arcadie Parfenie, Ernst & Young Over the last few years and especially after the accession of Romania to the EU, national borders in international and European trade have faded and globalisation of the economic activities has increased. Within this global context, the mobility of capital flows is substantial and as a result, international tax structuring became an important aspect for investing in the domestic market as well as for investing outbound. Though most of the multinational companies investing in Romania already have the investment structure designed by foreign tax advisers, the local markets, where only typical structures for holding investment and straight financing are used, represent an area of interest for all local tax advisers. Tax planning is becoming more complex and planning techniques more sophisticated. We should talk about the possibility of using hybrid loans which are treated differently by the country receiving the financing and the country providing it, which typically obtain a deduction in the entity receiving the finance with the corresponding return partially or totally exempt at the level of the recipient. The use of a hybrid entity which is treated as a separate taxable person by one country while being treated as transparent in another country, conversion of the dividend flows into interest or the other way around and debt push down to erode the taxable base.
March 01 2012
