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26 February 2016

Romania brings in stricter transfer pricing rules

Content team

Larger taxpayers in Romania will be affected by new transfer pricing documentation rules coming into effect this month.

The change in regulation is part of a government drive to improve anti-abuse monitoring, TP Week reported.

One of the key outcomes of the legislative change is that large taxpayers must now submit transfer pricing documents annually, rather than on request from the authorities, as under the previous system.

Large taxpayers will be determined based on the annual value of transactions conducted with related parties, such as other units within the same parent company.

These assessments will be based on the following thresholds: €200,000 (£157,900) for interest paid or received for financial services, €250,000 for services received or rendered, and €350,000 for the sale or purchase of intangible assets.

Taxpayers that fall below those levels will only have to file transfer pricing documents when asked to do so by the authorities.

These changes are part of a wider project to reform the tax system in Romania, which has also introduced changes to the information required in transfer pricing documentation.

Adrian Luca of Transfer Pricing Services in Romania said: "Through the new rules, the policymaker has devoted special attention to intra-group financial transactions, including hidden financing.

"More details are required to be included in the transfer pricing file."

He added that these new regulations should come as no surprise, in light of the recent European Study on Structures of Aggressive Tax Planning and Indicators, which singled out Romania for its failure to use specific anti-abuse monitoring and control indicators.

Transfer pricing has recently been a topic of political discussion around the world, as countries have debated the final package of measures coming out of the OECD/G20 Base Erosion and Profit Shifting project.

The initiative aimed to provide solutions to the problem of corporate profits 'disappearing' or being artificially shifted to environments where tax obligations are low or non-existent.

Content team, Bureau van Dijk

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