Order no. 3735/2015 issued by the President of the National Agency for Fiscal Administration (published in the Official Gazette no. 972/29 December 2015)
The Order approves the procedure for the issuance and amendment of the APA, as well as the content of the request for the issuance and amendment of the APA.
The provisions of this Order are applicable for APA issuance requests submitted to the tax authorities after 1 January 2016 (for requests submitted before 2016, the legislation in force when the request was submitted is applicable).
The main changes introduced by the Order (in application of the provisions on APA of art. 52 of the new Fiscal Procedure Code in force from 1 January 2016) consist inter-alia of:
- Direct reference to application of the Transfer Pricing Guidelines issued by the OECD, as subsequently amended and completed.
- Clarifications/amendments regarding the scope of the APA: an APA is to be issued for each transaction undertaken with a related party; the exception of the APA also applying in the fiscal year in which the APA request is submitted to the authorities is conditioned by its submission before the application of the transfer pricing policy, respectively of the conditions and mechanism to be considered for establishing the transfer prices (the previous legislation also provided for this exception, but on the condition of submitting the request before the conclusion of the transaction).
- In case of an unilateral APA request made by a taxpayer, the tax authorities can request conversion of such APA into a bi- or multilateral APA if there is any indication that the cross-border transaction in scope of the APA might have an artificial nature.
- The content of the request/documentation/APA:
- Specific requirements regarding the benchmarking study and the computation of the arm’s length range considered for the purpose of obtaining the APA;
- Detailed/extended requirements compared with previous ones regarding the content of the request and documentation that have to be submitted with the authorities for the issuance or amendment of an APA;
- Detailed/extended requirements compared to previous ones regarding the elements that must be contained by an APA (inter-alia the content of the report to be submitted to the authorities).
- Rejection of the request for issuance/amendment of an APA: introduction of the authorities’ duty to provide arguments for rejecting a request for issuing/amending an APA in the cases specifically presented by the Order. For example, in case of not providing all information required to be included in the request and documentation or not providing the additional information requested within 60 days or if the case described in the APA request is subject to criminal investigation (including for tax evasion) and is connected with the APA applicant, in case of not submitting a request for extension/amendment of the APA within at least 30 days before de elapsing of the term for which the APA was granted, etc.
Other key aspects on e.g. the preliminary discussion, the period that can be covered by the APA, the issuance terms and the level of issuance/amendment fees have essentially remained similar with the ones set by the procedure in force before 2016 (i.e. Government Decision no. 529/2007).
Form of the decision issued by the tax authorities in application of the procedure for elimination of double taxation between Romanian related parties
Order no. 3737/2015 issued by the president of the National Agency for Fiscal Administration (published in the Official Gazette no. 973/29 December 2015)
The Order (in force from 1 January 2016) approves the format and content of the form “Decision regarding the adjustment/estimation of the revenue or expense of one of the related parties” as well as the related instructions for issuing/using this form (“the Decision” hereinafter).
Specifically, the Decision is issued for the elimination of double taxation between Romanian related parties, in case further to a tax audit transfer pricing related adjustments are performed in respect of transactions between Romanian related parties. The Decision is issued (in correspondence with the tax decision issued further to the tax inspection to the verified taxpayer) so that the Romanian related party of the verified taxpayer, partner of the latter to the transaction for which transfer pricing adjustments were performed is able to correct in its turn its own taxable base and tax return (being binding for the tax authority responsible for its administration).
The Decision is issued by the tax authority representatives performing the tax inspection of the verified taxpayer only after the tax decision issued to the latter further to the tax audit is considered final from both a tax administrative and legal proceedings perspective, namely:
- After expiry of the term for filing a tax administrative appeal, in case the verified taxpayer does not challenge the tax decision issued further to the tax audit;
- After a court decision is issued or in case no court proceedings are initiated, after decision is reached for the tax administrative appeal (depending on the case).
The Decision is issued (separately for each Romanian related party partner to the transaction for which transfer pricing adjustments were performed) in 5 copies distributed to the verified taxpayer, its Romanian related party and the relevant tax authority bodies that performed the inspection and respectively administer each of the discussed taxpayers.
EY is able to provide support on any specific aspects related to the above.
