Romanian intermediaries and taxpayers are required to disclose to the Romanian tax authorities (“ANAF”) information on reportable cross-border transactions which fulfill the hallmarks mentioned by the Directive. ANAF will subsequently exchange this information through automatic exchange of information with the tax authorities in the countries involved in each transaction.

The first reporting wave will start on 31 August 2020 and, by this date, intermediaries and taxpayers are required to disclose information related to the qualifying arrangements which have been identified starting from 25 June 2018 – the date of entry into force of the Directive. After August 2020, the reporting should be done within 30 days of the day after the reportable cross-border arrangement (i) is made available for implementation, (ii) is ready for implementation or (iii) when the first step in its implementation has been made, whichever occurs first.

KPMG Comment

The text amending the Romanian Fiscal Procedure Code is similar to that included in the Directive, with small amendments. However, additional guidance from the tax authorities on the interpretation of the hallmarks will still be required, in order to ensure a unified approach within the market. The Ordinance mentions that ANAF will publish on its web page a guide with more details on the interpretation of the hallmarks, but no time limit is specified. The form to be used for reporting purposes will be published by ANAF within the 60 days following the publication of the Ordinance.

Who will report?

1. Intermediaries

An intermediary is only required to report to ANAF if it has a presence in Romania (local residency, permanent establishment, incorporation or professional registration).

Where an intermediary has a reporting obligation in multiple Member States, the information should be filed only in the Member State that features first in the list below:

• The Member State where the intermediary is resident for tax purposes. 
• The Member State where the intermediary has a permanent establishment through which the services with respect to the arrangement are provided. 
• The Member State in which the intermediary is incorporated, or by the laws of which the intermediary is governed. 
• The Member State in which the intermediary is registered with a professional association related to legal, taxation or consultancy services.
   

An intermediary can be exempt from its reporting obligation if it obtains proof that the same information related to a certain reportable cross-border arrangement has already been reported by another intermediary. It is not yet clear what evidence is deemed sufficient to demonstrate that the reporting has been fulfilled by another intermediary. 

2. Intermediaries covered by a legal professional privilege

Intermediaries covered by legal professional privilege will be required to fulfil their reporting obligation to the Romanian tax authorities only if they are in the possession of a written agreement from the client, allowing them to do so.

If the absence of such an agreement from the taxpayer, an intermediary which is exempt from the reporting obligation is required to notify in writing the other intermediaries or the taxpayer itself (if no other intermediaries exist) that no data will be disclosed and that the reporting obligation reverts to the taxpayer.

3. Taxpayers

If no intermediaries exist, or if they are covered by professional privilege, the reporting obligation reverts to the taxpayer.

Where a taxpayer has a reporting obligation in multiple Member States, the information should be filed only in the Member State that features first in the list below:

• The Member State where the taxpayer is resident for tax purposes.
• The Member State where the taxpayer has a place of business or designated base which benefits from the arrangement.
• The Member State where the taxpayer receives income or derives profits.
• The Member State in which the taxpayer pursues business.
  

Where multiple taxpayers are involved, the relevant taxpayer that is required to file the information is the one that features first in the list below:

1. The taxpayer that agreed the arrangement with the intermediary.
2. The taxpayer that is managing the implementation of the arrangement.

A taxpayer will not be required to report if there is evidence that the arrangement has been reported to ANAF by another taxpayer.

It is not yet clear what type of evidence is deemed sufficient to convincingly demonstrate reporting by another party. 

What should be reported?

The information to be communicated should contain the following:

• The identification of intermediaries and relevant taxpayers, including their name, date and place of birth (in the case of an individual), residence for tax purposes, tax identification code and, where appropriate, the taxable persons that are associated enterprises to the relevant taxpayer
  
• Details of the hallmarks that make the cross-border arrangement reportable.
• A summary of the content of the reportable cross-border arrangement, including a reference to the name by which it is commonly known, if any, and a description in general terms of the relevant business activities or arrangements, without leading to the disclosure of a commercial, industrial or professional secret or of a commercial process, or of information the disclosure of which would be contrary to public policy.
• The date on which the first step in implementing the reportable cross-border arrangement has been made or will be made.
• Details of the national provisions that form the basis of the reportable cross-border arrangement.
• The value of the reportable cross-border arrangement.
• The identification of the Member State of the relevant taxpayer(s) and any other Member States which are likely to be affected by the reportable cross-border arrangement.
• The identification of any other taxable person in a Member State likely to be affected by the reportable cross-border arrangement, indicating the Member States to which such a taxable person is linked.
   

What if no reporting is carried out?

The following penalties will apply:

• Between RON 20,000 and RON 100,000 (approx. EUR 4,000 – EUR 20,000) – applicable to both intermediaries and taxpayers, if the information is not disclosed or it is disclosed after the relevant deadline.
  
  
• Between RON 5,000 and RON 30,000 (approx. EUR 1,000 – EUR 6,000) –for intermediaries covered by legal professional privilege which are exempt from the reporting obligation- if the intermediary does not notify other intermediaries involved or the taxpayer itself that no information will be disclosed and that the reporting obligation reverts to the other intermediaries or the taxpayer.
   

Hallmarks and main benefit test

As per the text of the Ordinance, the hallmarks are in line with those mentioned in the Directive, with no significant changes, and are divided into two categories: generic hallmarks (Heading A) and specific hallmarks, e.g. related to cross-border transactions, concerning automatic exchange of information or transfer pricing (Headings B, C, D, E). The main benefit test should only apply with respect to those hallmarks specifically mentioned in the Directive (i.e. category A and B hallmarks and paragraphs (b)(i), (c) and (d) of category C hallmarks).