Penalties of up to €20,000 for failure to submit the CbC report

On 1 December 2021, the PublicCountry-by-Country Reporting Directive (Public CbCR) was published in the Official Journal of the European Union (EU). This directive aims to increase the transparency of large multinational companies by requiring organisations with revenues of more than €750 million to publicly disclose, in a specific report, the corporate taxes they pay.

Romanian lawmakers opted for an earlier adoption of the rules. As of 1 September 2022, Romania became the first country to transpose the (EU) Directive 2021/2101 on Public Country-by-Country Reporting (Public CbCR) into domestic law, through Order no. 2048.

A year later, through Order 1730/2023, the Romanian legislation has been aligned with the provisions of Directive (EU) 2021/2101, in the sense that Romanian medium-sized and large subsidiaries which are controlled by multinational groups with an ultimate parent entity based in the EU are no longer subject to Public CbCR obligations in Romania.

If the ultimate parent company is established in a third country, the obligation to publish the report may be fulfilled by any affiliated entity within the group established in a Member State.

In either case, multinational groups with a non-EU parent, which operate Romanian medium-sized and large subsidiaries, will have to meet the Romanian publication deadline by the end of 31 December 2024, for a calendar reporting FY.

The implementation of this Directive in Romania marks a significant transformation regarding the tax transparency of large multinational companies. It not only imposes strict legal obligations but also opens up new opportunities for companies to review and enhance their tax transparency strategies. These strategies will undoubtedly be closely observed by the public.

Even though the local legislation regarding Public CbCR has been amended, taxpayers still encounter difficulties in understanding their legal obligations and face the absence of an official form to facilitate report preparation. Thus, the first year of reporting is and will continue to be difficult to manage.

Non-Public CbCR

Multinational groups operating in Romania, which submit the non-public CbC report only in countries with which Romania does not have an automatic exchange of information agreement on CbC, must also submit the report to the Romanian tax authorities. The Romanian tax authorities have started to check the status of the filling process and send out notifications to some taxpayers that have not fulfilled their obligation within the legal deadline.

Liviu Gheorghiu Partner, Tax

Adrian Mutea, Tax Manager, Mazars in Romania, added: 

Penalties for non-submission of the CbC report (Form R404) are among the highest in the Romanian tax legislation, amounting to up to €20,000 per fiscal year. Companies should assess their local CbC obligations, especially in cases where the ultimate parent is outside the EU.

Adrian Mutea Senior Manager, Tax

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