Transfer pricing is becoming more and more of an issue in Romania. Although not a member yet of OECD Romania has tried in many cases to follow the rules of the OECD. A number of recent treaties against Double Taxation follow the OECD recommended format.

One of the areas in which the OECD has been particularly active is in the area of regulation of Transfer Pricing.As a Romanian law firm we think that Romania originally was a victim of much transfer activity. Entry into the European Union caused the question of transfer pricing to be examined in detail and the Government produced introduced an order in 016 to cover this point.

The order dealt in the main with two type of tax payers in relation to Transfer Pricing namely large tax payers and medium and small tax payers. If a company fell into any of these categories, then they need to be aware of the problems that may occur in the future.

The second category of tax payers per the provisions of Order No. 442/2016 from 22 January 2016, article 2 paragraph 1, are the large tax payers, and the small and medium tax payers performing annual transactions with all affiliates in the amount greater than or equal to any of the following thresholds:

• 50.000 EUR, excluding VAT, in case of received / paid interest for financial services;
• 50.000 EUR, excluding VAT, for services received / rendered;
• 100.000 EUR, excluding VAT, in respect of transactions regarding the sale/ purchases of tangible or intangible goods.

This category of tax payers have to register Pricing Transfer documentation with the fiscal authorities only at the request of the tax authority, when it is subject to an audit control by the fiscal authorities.

When an audit control is ongoing, the tax payers must draft the documentation within 30-60 days from the date of the request, which can be extended once at the written request of the tax payer by a further period of 30 calendar days.

If these thresholds are not met the medium and small taxpayer do not have to register the Transfer Pricing documentation at all, they just have to comply with the standard arm’s-length principle, according to the general rules of accounting and taxation.

Whilst large tax payers will or should be aware of the Transfer pricing requirements and will have persons able to deal with such matters, small to medium enterprises may not have these resources and should be aware of the requirements. They may be called upon for them to comply with these rules at some time in the future in the event of a tax audit.