Do you carry out transactions with affiliated persons? Pay attention to the transfer pricing file!

Newsroom 04/01/2016 | 11:06

The New Tax Code, and especially the New Code of Tax Procedure, which have entered into force as of January 1st, 2016, brought about important changes regarding transactions the affiliated persons.

by Daniel Moreanu, lawyer with Moreanu Law


It is highly important to understand that these provisions are applicable both in relation to transactions carried out by individuals and legal entities.

What is transfer pricing?

The Fiscal Code regulates that the price at which tangible and intangible assets or services performed between affiliated entities are transferred, represents transfer pricing. We have in mind legal operations such as: sales of goods, loans, provision of consulting services, management, etc. These kinds of operations which occur between affiliated persons all fall under the scope of tax provisions concerning transfer pricing.

Which are the affiliated persons?

In case of individuals (natural persons), affiliated persons mean husband/wife or relatives up to the 3rd level included.

Between legal entities, affiliated persons mean holding, directly or indirectly, including holding through affiliated persons, at least 25% of the value/number of shares or voting rights by a legal person to another legal person or the effective control of that legal person. As it may be observed, while the provisions regarding value/number of shares or voting rights are measurable, the “effective control” concept may give rise to various interpretations. The affiliated person concept, as described above, is applicable also in the relationship between individuals and legal entities.

Which are the main aspects which should be taken into consideration?

Any transactions between affiliated persons described above must be carried out in accordance with the market value principle.

In case of transactions with affiliated persons, in order to demonstrate compliance with the market value principle referred to above, the individual or legal person incurs the obligation to prepare the transfer pricing file.

The major difference compared to the tax provisions in force until the end of 2015 consists of the fact that, as of January 1st, 2016, the drawing up of the transfer pricing file becomes mandatory in all cases in which transactions with affiliated persons are carried out. Therefore, as compared with the previous regulations pursuant to which the drawing up of the above mentioned file was mandatory only upon the request of the tax agent, as of January 1st, 2016, all entities performing transactions with affiliated persons are obligated to prepare the transfer pricing file. The transaction value above which the tax payer incurs the obligation to prepare the transfer pricing file is due to be approved through an order issued by ANAF’s (National Agency of Fiscal Administration) president.

In addition to the adjustment that may be performed to the transactions between affiliated persons which are not carried out at the market price level, the failure to prepare or submit the transfer pricing file, is punishable with fines from RON 12,000 (EUR 2,656) to RON 14,000 (EUR 3,099) for legal entities falling within the category of medium and large tax payers and from RON 2,000 (EUR 442) to RON 3,500 (EUR 774) for other legal entities, as well as for individuals.

About Daniel Moreanu

PhD Candidate; with 10 years’ experience in the legal field, Daniel Moreanu is an attorney-at-law representing during his career, local and multinational companies. At the same time, he is author of several articles/studies published in most reputable law magazines in Romania. For more details, please refer to:

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