Starting with the next year, the companies will be obliged to prepare the transfer pricing file, as per the new Fiscal Procedure Code, law 207/2015. Currently, the transfer pricing file must be presented at the express requirement of the Fiscal Control which usually offers a three months period in order to prepare the transfer pricing file.
The companies which will have transactions with the affiliated parties above a certain limit, will be obliged to have the transfer pricing file prepared and also submitted to the Fiscal Authority.
The details regarding the thresholds above which the preparation of the transfer pricing file becomes mandatory, the deadlines for the submission and the content of the file will be established through an order issued by the National Agency of Fiscal Administration. In this moment, the content and the conditions which should be fulfilled by the transfer pricing file are established by the Order no. 222/2008. Currently, the companies are obliged to present the transfer pricing file at the request of the Fiscal Control. If the companies will not present it to the authorities, the penalty is between 12.000 and 14.000 RON.
Contexpert recommends you to carefully prepare the transfer pricing file because this domain is the most exposed to interpretations coming from the fiscal inspectors. In the last years, the fiscal authorities started to be more interested in the transfer pricing file, so they started to require more often the documentation during the controls. This attitude is caused by the major changes at the global level and also at the European one, regarding the transfer price.
What are the changes?
Let’s compare the old with the new regulation:
The article 108 paragraph 2 from the new Fiscal Procedure Code provides: in order to document the fact that the arm’s lenght principle is applied, the tax payer who conducts transactions with the affiliated parties has the obligation to prepare the transfer pricing file. At the requirement of the central fiscal authority, the contributor / payer has the obligation to present the transfer pricing file. The amount of transactions for which the contributor / payer has the obligation to prepare the transfer pricing file, the deadlines for the preparation of the file, the content and the necessary conditions to be fulfilled will be approved through an order by NAFA.
According to the Code in force, article 79 paragraph 2 provides: in order to establish the transfer prices, the contributors who have transactions with the affiliated parties, must prepare and present the transfer pricing file if the fiscal authority requires within the deadlines communicated. The content of the transfer pricing file and the conditions based on which it could be required, are approved through an order issued by NAFA.
As you noticed, in the new Fiscal Procedure Code, the obligation to prepare the file is provided separately from the one to present it. Also, new legal requirements regarding the limits and deadlines will be established.
The changes are not surprising. Since 2014 have started to appear such proposals, but they were not put in practice at that moment. At that date, the proposed limit was 100.000 EUR for the transactions with goods and 50.000 EUR for the transactions with services. For the submission of the files, there were two variants: immediately after the corporate income tax statement was submitted or in 60 days after the fiscal year close.
Why is important to prepare the transfer pricing file?
Until some years ago, not the companies, nor the fiscal control were interested in this domain. But, the changes of the global legislation imposed changes also in Romania.
Contexpert warns you that the adjustments regarding the transfer prices could reach a level of tens of millions of EUR. You should seriously prepare yourself!
At what your attention should be focused?
Essential in front of the authorities is the justification of the economic substance of the transactions with the affiliated parties, in such way that the inspectors could not reclassify them as artificial transactions. The administrative services are the most sensitive ones (consultancy, management, marketing, human resources and so on).
To be remembered! Before verifying the transfer pricing file and the correctness of the way it was prepared, the reality of the transactions will be verified. It will be necessary to prove if the transactions can be correlated with the activity of the company and if they were really needed. If the requirements are not fulfilled, any analyze regarding the prices used will be useless and the transactions will not be taken into consideration when calculating the taxes.
Additionally taxes to be paid
The NAFA estimates the transfer prices by comparing three examples of similar transactions against the investigated transaction and calculate the average price for those three similar transactions. Because the analysis is on past transactions, there is a significant risk that the NAFA database to differ from the actual prices used by companies.
!The adjustment will result in paying additional taxes and of course penalties for the late payment.
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