"In the current context, companies need to be prepared to navigate through the uncertainties regarding progressive taxation, the future of the single rate and the predictability of VAT rates", said Georgiana Iancu, Partner, Indirect Tax and Tax Digitalization Practice Leader, EY Romania at the opening of the EY Annual Tax Conference.
The 19th edition of the Annual Tax Conference organized by EY Romania brought together over 250 business representatives, with the event focusing on legislative changes and tax increases for companies and individuals. EY Romania specialists provided information and answers to facilitate the understanding of the challenges of this year, characterized by the implementation of new European rules and directives. On behalf of the authorities, Albert Fruth, Head of Service within the Information Management Unit (ANAF), Magdalena Grădinaru, Deputy Director General for Tax Control Activity (DGAMC, ANAF), and Marcel Mutescu, President of the Romanian Customs Authority, participated, who presented clarifications on the digitalization efforts of the tax and customs administration.
Trends in tax controls 2025. Transfer pricing and tax controversies
Emanuel Băncilă, Partner, Tax Litigation and Inspections Coordinator, Băncilă, Diaconu și Associații, stressed the importance of creating in the future a specialized tax risk minimization department to audit the tax risk in relation to the taxpayer's business model. "Challenging the business model by the tax authorities has become a practice constantly encountered in tax inspections. The surprising ways of recharacterizing certain transactions in order to establish tax factual situations leading to additional tax liabilities make it almost impossible to quantify the tax risk in certain industries," he said.
According to reports published by ANAF, the amount of amounts imposed in 2024 doubled, as the number of inspections increased by only 10%, while this year is expected to see an increase in tax control activity, with documentary checks alone expected to increase by 100%. Given the accelerated increase in tax control activity, "taxpayers must also take into account the fact that the risk of taxation is influenced in practice by the business models adopted by the taxpayer for past periods", explained Emanuel Băncilă. There is also a tendency for tax authorities to adjust the reclassification of tax transactions with negative consequences for the taxpayer, even if the tax matter has been settled in the taxpayer's favor by a judgment of the Court of Justice of the European Union.
Speeding up the resolution of MAPs: priority for improving the Romanian tax system
In the context of increasing cross-border transactions, economic double taxation has become a major problem for multinational groups in Romania. Transfer pricing controls carried out by the Romanian tax authorities lead to significant adjustments, resulting in the taxation of the same income in two different states. Adrian Rus, Partner, Head of the Transfer Pricing Department, EY Romania, emphasized the importance of the swift resolution of mutual agreement procedures (MAP) for the elimination of economic double taxation. "Apart from the possibility of resorting to a court action, which will end with a final decision settling the dispute with the Romanian authorities, a way that guarantees the elimination of economic double taxation is to file a request based on a mutual agreement procedure (MAP) for the elimination of this risk," he explained.
According to statistics published by the OECD, the number of MAP requests in Romania has tripled in the last three years, reaching almost 50 in 2023, a significant increase in the number of cases where taxpayers have sought to resolve double taxation by mutual agreement. However, it is worrying that in 2023, only seven of these cases were resolved and four of these were withdrawn by the taxpayer. "In the context of increasing transfer pricing audits, we question to what extent Romanian taxpayers have real access to these international procedures," the EY expert added.
Resolving as many cases as possible is a challenge, but it can be achieved with a structured and efficient approach from the tax authorities, and speeding up the resolution of MAPs is in line with the standards and best practices promoted by the OECD. "Therefore, this approach will not only facilitate better cooperation with taxpayers and increase confidence in the Romanian tax system, but will also support Romania's efforts to join the OECD, thus strengthening the country's position on the international stage," Adrian Rus concluded.
2025: the year of modernization and digitalization of customs clearance in Romania
"The year 2025, from the customs perspective, will be dedicated to the fluidization of customs clearance of goods at the external border of the European Union, in which context the Romanian Customs Authority is in the process of implementing advanced control systems based on risk analysis and state-of-the-art equipment and the new national import system. At the same time, the newly established "customs audit" structure will proactively encourage voluntary compliance by economic operators, in a first phase", emphasized Mihai Petre, Director, Global Trade, EY Romania.
Labor taxation - between EU legislation and changes at national level
The two EU directives that bring novelties to the labor market this year concern, firstly, the setting of an adequate minimum wage at EU level and, secondly, the regulation of employment relations for digital platform companies.
"An important aspect of the first directive is that it takes into account the adequacy of the minimum wage according to the specifics of each country, including Romania. The second directive, recently approved by the European Parliament, aims to improve working conditions on digital platforms and must be implemented by 2026. It includes clear measures, which define the professional status of people working through platforms and addresses the misclassification of this type of work", detailed Corina Mîndoiu, Partner, Income Tax and Social Contributions Department, EY Romania.
New challenges also in the area of direct taxes: Pillar Tax and clarifications needed for IMCA and ICAS
In terms of taxation, the current year will be marked by the need to collect more taxes. For now, the special construction tax (the so-called "pole tax") has been reintroduced, IMCA and ICAS remain in place, and tax facilities for IT, agriculture and construction employees have been removed. "In the sphere of direct taxes, there is a need for implementing rules clarifying specific situations for determining IMCA, ICAS, and also the interference of these taxes, including with corporate income tax. On special construction tax we are also waiting for the rules, but taxpayers need to prepare already by reviewing the list of assets and making impact estimates. Good news is that the R&D facility remains in place for both corporate and payroll tax. Positive steps are being added by extending the R&D credit to the R&D tax credit for the AMBI and, we hope, by introducing a mechanism to maintain the benefits in Romania in the context of the application of the global minimum tax," said Raluca Popa, Partner, Direct Tax Department, EY Romania.
"Also, the global minimum tax imposes, from 2024, a minimum effective tax threshold on groups of companies, in each country in which they operate and comes with a number of complexities that need to be addressed without delay," the EY expert added.
Year-end and accounting regulations
In the area of accounting regulations, from the financial year 2024 onwards, the provisions of the Directive adjusting the size criteria for micro, small, medium and large enterprises and small, medium and large enterprises or groups have been transposed into national law. Therefore, in order to determine the category of reporting entity and the format of the financial statements applicable as of December 31, 2024, entities must verify the updated thresholds for two of the three indicators provided by the law (total assets, turnover and average number of employees) as of December 31, 2024 and December 31, 2023, have been exceeded. "We draw your attention to the fact that the thresholds for turnover and total assets on the basis of which the obligation to audit the financial statements is established have not been changed. As a result, some companies will prepare financial statements in a simplified format with three components, but the obligation to audit the financial statements remains," explained Diana Lupu, Partner, Global Compliance and Reporting, EY Romania.
An additional challenge at this year-end for companies that are part of large groups comes from the tax area: "The global minimum tax applies in respect of financial years starting on or after December 31, 2023. The potential impact of the global minimum tax must be included in the financial statements as of Dec. 31, 2024, even if the first reporting and payment due date is 18 months after the end of the fiscal year. For groups that have a fiscal year other than a calendar year, the impact of the global minimum tax should be included in the financial statements prepared for the fiscal year beginning after December 31, 2023," the EY expert added.
Tax digitization: e-SAF-T, e-Invoice and e-VAT are rewriting the rules for tax inspections
From 2025, tax inspections will start, which will include 2022, when large taxpayers filed their first SAF-T returns. Among other things, the inspections will verify that the data on tax returns matches the data in accounting and tax records, including the SAF-T. Therefore, companies must ensure the consistency and quality of the data declared through SAF-T, according to the tests published by ANAF in 2023 and updated in 2024 for the "General Ledger Entries" section.
e-TVA currently provides companies with access to how the tax administration correlates data from operational systems (e-invoice, e-cash registers, e-transportation, customs records) with tax returns (D390, D394) and the D300 VAT return. "At the same time, a correctly prepared SAF-T declaration allows the generation of an accurate picture of the VAT return and the reconciliation of data, so that one of the pillars of tax inspections will be the correlation of operational systems with those of tax reporting," explained Georgiana Iancu.
"As Romanian companies continue to adapt to the e-invoice and e-VAT requirements by adjusting internal processes and systems, the continued dialogue between the tax administration and taxpayers remains vital for these digitalization measures to bear fruit," the EY expert was keen to stress.
"The year 2025 represents a time of major change for the Romanian tax system, bringing significant challenges for companies. Increasing taxes, adapting to digitalization and implementing European tax rules require careful tax planning and open communication between taxpayers and authorities. It is essential that the business environment is vigilant and prepared to successfully navigate through these significant changes", concluded Georgiana Iancu.
