Romania updates list of large taxpayers required to prepare transfer pricing documentation

By Adrian ȚAGA, PhD, ADIT, tax advisor, National Tax Agency, Bucharest

The Romanian National Tax Agency published a new order on October 29 that updates the list of large taxpayers, which, under Romanian law, are managed by a separate department (large taxpayer office) and are subject to special provisions requiring them to prepare transfer pricing documentation.

The provisions of the new order no. 1721 maintain the criteria previously in force for determining whether a taxpayer is classified as large. However, updates were made to the list due to changes in which taxpayers meet the criteria.

Criteria for establishing classification as a large taxpayer

Determining large taxpayer status involves considering a set of general and specific cumulative criteria that are related to the taxpayer’s global financial indicators, tax weight, type of activity, organisational structure, investments made in the last three years, or membership in a group.

According to these criteria, there are currently 2,940 taxpayers which are classified as “ large” until December 31. Starting from January 2022, the updated list now includes 3,364 taxpayers – a 15 percent increase.

The architecture of the criteria is centered around the systemic weight that these companies carry in the Romanian tax ecosystem. Public records estimate that large taxpayers generated over 40 percent of tax revenues in 2018.

Transfer pricing requirements for taxpayers on the list

As provided by Romanian legislation, the main transfer pricing requirement for large taxpayers is to prepare annual transfer pricing files. There is a minimum threshold for transactions to trigger transfer pricing filing obligations.

Documentation should be prepared when associated interests of financial transactions exceed the EUR 200,000 threshold (approximately USD 230,000). In the case of service provisions, the threshold is set at EUR 250,000 (USD 288,000), while for goods trading it is set at EUR 350,000 (USD 403,000). This is required for related party transactions only.

For transactions above the thresholds, large taxpayers should prepare the transfer pricing file no later than 10 days after the annual tax return deadline. If the threshold is not met, transfer pricing requirements are determined individually by the tax administration.

—Adrian ȚAGA, PhD, ADIT, is a tax advisor at the National Tax Agency, Bucharest.

This article was prepared by the author in his personal capacity. The facts and opinions expressed in this article are the author’s own and do not reflect the view of the National Tax Agency or any other public institution or body.