On 9th of June the emergency ordinance (“DVO“)  42/2017 was decreed to change and supplement the Romanian tax procedure code (“StVO“). This DVO represents the adaption of the EU guideline 2016/881 (regarding the change and amendment the EU guideline 2011/16) issued in May 2016, into Romanian law and includes the regulations about the automatic exchange of tax information within the EU member states. The specifications of this directive are part of the action plan no. 13 of the Base Erosion and Profit Shifting intervention (“BEPS”) issued by the OECD, and present actions against tax avoidance and aggressive international tax management. The DVO took effect on 13th June 2017.

Country-by-Country Reporting (“CbC-Reporting”)

Objective of this country based reporting is to react to specific approaches used by corporation groups for tax avoidance or rather aggressive tax management. A possible approach is i.a. a double deduction of operating expenses (i.e. of the corporate parent as well as other business premises), the double non-taxation of profits as well as the exploration of beneficial tax rates by shifting profits to countries with lower tax rates.

In every country, the consortium has business activities going on, the CbC-Reporting has to contain:

a) Aggregated information about the following: total income, profit before taxes, paid and accrual corporation tax, accumulated earnings, Number of employees, fixed assets; b) Presentation of every company within the group, including tax residence and main business activities

The tax authorities use the information i.a. for the following cross-national analysis:

a) Evaluation of risks regarding transfer prices, including the non-compliance with relevant regulations about transfer price structuring.

b) Evaluation of risks regarding erosion of taxation base;

c) Statistical analyses;

d) Analyses about other cross-border aspects in regards to tax audits;


Target audience of this transparency regime are so called “top parent companies” of multinational corporation groups with tax residency in Romania. Under special circumstances also business units of foreign companies with tax residency in Romania. (i.e. the top parent company has no reporting obligation in the country of residence).

Exempted from these obligations are multinational companies which have not exceeded a consolidated revenue of 750 million Euros (or the equivalent in RON; obliged to convert with the average exchange rate of January 2015, issued by the Romanian National Bank) in the previous business year. According to estimates by the OECD, 85-90% of the multinational companies are exempted from the CbC-Reporting obligation by the value limit. Nonetheless, the companies obliged to the CbC-Reporting include 90% of total generated revenues.

These reports have to be submitted within 12 months after the last day of the fiscal year in the corporate group. The report is transmitted unsolicited and automatically by the tax authorities to the member states in which the corporation has at least one subsidiary. This exchange has to be done within 15 months after the company´s last day of the fiscal year. For the first period 8financial years which start from 1st of January 2016) with reporting obligation, the data exchange has to be done within 18 months.


The delayed, incorrect or incomplete submission of the CbC-Report, is sanctioned with a penalty between 30.000 and 50.000 RONM; the total omission is sanctioned with penalties between 70.000 and 100.000 RON.


The CbC-Reporting by DVO in June, represents the necessary adaption of the EU guideline into national law, as the pan-European execution was compulsory by 4th June 2017. In general, the CbC-Reporting is meant to create transparency in tax matters in multinational companies, and provides most of all an advantage for the involved tax authorities. Even though the number of multinational companies in Romania is manageable, this reporting obligation is a big challenge and requires a trustworthy (company) reporting. Subsidiaries of foreign companies located in Romania, will have to be prepared to arrange additional information and reports in this context.