Recently, the Romanian Government published Law no. 123/ 20211 regarding the approval of Government Ordinance no. 5/ 2020 amending the provisions of DAC 6 Directive as transposed in the Fiscal Procedure Code (Mandatory Disclosure Rules (MDR) legislation), in the Official Gazette. The amendments relate to:
The amendments are effective as of 7 May 2021.
DAC6 imposes the obligation on intermediaries or taxpayers to report to the tax authorities potentially aggressive cross-border tax arrangements, identified based on certain hallmarks.
According to Government Ordinance no. 5/ 2020, intermediaries now may be exempted from the obligation to report information on cross-border arrangements if they have conclusive evidence to show beyond any doubt that the information has already been reported to the National Agency for Fiscal Administration (NAFA) or to the competent authority of another Member State by another intermediary. This exemption also applies to the relevant taxpayers under the same conditions.
Amendments were also made regarding the hallmarks in categories B and E from Annex no. 4 to the Fiscal Procedure Code, as follows:
Hallmarks B – specific hallmarks related to the main benefit test:
Hallmarks E – transfer pricing hallmarks:
Non-fulfillment of the reporting obligation triggers a penalty of up to RON100,000.
Determining if there is a reportable cross-border arrangement raises complex technical and procedural issues for taxpayers and intermediaries. Taxpayers and intermediaries who have operations in Romania should review their policies and strategies for logging and reporting tax arrangements so that they are fully prepared for meeting these obligations.
For additional information with respect to this Alert, please contact the following:
Ernst & Young SRL, Bucharest