2023 saw numerous changes in tax and accounting, with a significant impact on the way Romanian companies manage their financial reporting and obligations. Thus, it is important to carefully plan the entire process and respect the legal deadlines to avoid potential penalties and benefit from possible discounts.

“For the finance-accounting department of any company, the ultimate goal of the entire year-end closing process is the preparation and publication of the annual financial statements. These statements not only represent a simple report of the organisation's performance but also serve as the foundation on which its future strategies are built. Therefore, it is extremely important to carefully navigate each stage of the closing and verification process to ensure that the annual financial statements contain accurate, correct, complete, and, of course, comparable information with the previous financial years.”, mentioned Mariana Dragomir, Outsourcing – Accounting Partner, Mazars in Romania.

The most relevant accounting and tax issues

• Accurate and timely inventory is essential for determining the necessary VAT adjustments. We encourage companies to pay close attention to this process as it directly impacts VAT deductibility and tax compliance.

Mihaela Hampu, Senior Tax Manager, added: “In the case of destroyed, lost or stolen goods, as well as technological losses, the right of deduction may be retained if the situations are duly confirmed by proof of destruction, supporting documents for theft, or own consumption norms.”

• The accurate and efficient calculation of corporate income tax involves a careful analysis of applicable tax credits, adjustments, and deductions. Companies must accurately assess all transactions, pay special attention to deductible and nondeductible expenses, and identify any available deductions under current legislation

We remind companies that, for the 2021-2026 period, the deadline for filing the annual corporate income tax return (Form 101) is 25 June of the following year.

• If during a tax year a micro-enterprise earns more than €500,000 in revenue or the share of consulting and management income in total revenue is more than 20% (inclusive), it owes corporate income tax from the quarter in which either of these limits was exceeded.
• ·Benefits granted to employees in the form of equity instruments are accounted for from the date the benefits are granted until vesting conditions are satisfied. This applies even if employees receive benefits directly from the reporting entity's parent or another group company.

The transition to Public Country by Country Reporting (Public CbCR)

We emphasise the importance of adapting to the new CbC reporting requirements and effective transfer pricing management, stressing the need for rigorous documentation and a proactive approach to identify and mitigate potential transfer pricing risks.

The transition to the CbC public reporting and voluntary transfer pricing adjustments are new issues that require further attention. We therefore encourage companies to review and adjust internal policies to align with current global and local requirements.

Non-financial reporting, an essential strategic element

Companies with more than 500 employees must include detailed information on environmental, social, human rights, and anti-corruption issues in their reporting, emphasising the importance of sustainability in their business strategies.

In addition, given the latest updates on the Green Taxonomy, it is important to note that eligibility indicators (relating to CapEx, OpEx, and turnover) will be calculated for all six environmental objectives, according to the newly published lists of activities. However, the approach for determining the alignment indicators remains the same as in the previous financial year. Changes have also been made to the templates used for reporting these indicators.

“On 26 January, Directive (EU) 2022/2464 of the European Parliament and of the Council regarding companies' sustainability reporting, known as the Corporate Sustainability Reporting Directive (CSRD), was transposed into Romanian law through Ministry of Finance Order no. 85/2024 (“OMF 85/2024”).”, mentioned Laura Negrișoiu, Sustainability Director, Mazars in Romania.

In conclusion, for a successful closing, our experts encourage companies to perform detailed checks and reconciliations, ensuring that all transactions are correctly reflected and documented. We also recommend careful, step-by-step planning of year-end closing activities to ensure the accuracy and integrity of financial information.