In the context of announcements published by the National Agency for Fiscal Administration (ANAF) regarding the planning of several tax audits, especially among large and medium taxpayers, but also on the prices’ matters being placed on the top of matters of interest within the government Program, we draw attention on the importance of the timely preparation of the transfer pricing documentation.

Legal provisions

In case of large taxpayers that conduct intra-group transactions that exceed the specific threshold established by Order no. 442/2016 (listed in the following paragraph), the transfer pricing documentation corresponding to a tax year must be prepared (attention, not submitted!) until the term of submission of the yearly income tax statement (26 March 2018 for 2017).

Starting with the tax audits conducted in 2017, the transfer prices file can be requested any time after the legal deadline regarding the corporate income tax for the previous year, having as term of submission ten calendar days for the transactions that exceeded the following thresholds:

  • EUR 200,000 in case of interests collected/paid for financial services:
  • EUR 250,000 in case of transactions regarding the provision of services received/provided;
  • EUR 350,000 in case of transactions regarding acquisitions / sales of tangible or intangible goods.

In case of large taxpayers that conduct intra-group transactions that do not exceed specific threholds, as well as in case of small and medium taxpayers, the deadline for submitting the transfer prices file is comprised between 30 and 60 days from the date of request (strictly within a tax audit), being possible to extend this deadline one time, at the request of the company, with maximum 30 days.

Practical matters

Therefore, since the deadline of 25 March 2017 that concerns large taxpayers passed, these can anytime expect to be requested the transfer pricing documentation for 2016, if they meet the requirements above, having only ten days available from the moment of request to submit to the Tax Office. At the date of this article, the business environment through working groups has already initiated a dialogue through written official letters with the authorities by extending the deadline until 30 June 2017 or at any other date from a period that is not that intense for the financial departments, however, following the analysis, the authorities decided to maintain the 25 March 2017 deadline.

We underline that, in practice, the tax authorities grant maximum deadlines for submitting the file only in exceptional situations (for numerous intra-group transactions and/or with a high complexity) and at the same time the same approach also concerns the required term of extension, therefore it is possible only rarely to benefit from the deadline of maximum 90 days (60 days + 30 days extension).

Even a 90 calendar days period proves to be insufficient in certain situations, taking into account all practical measures required for preparing the transfer pricing documentation:

  • requesting quotes from consultants;
  • selecting the consultant;
  • analyzing and negotiating the contract;
  • summarizing and providing the information;
  • analyzing the information on the market; and
  • drawing-up the file itself.

Thus, a prudent approach for companies that conduct intr-group transactions would be to analyze the opportunity of drawing-up early the transfer pricing documentation for the entire non-prescribed period in terms of corporate income tax, in the light of the sustained interest of ANAF and of the relatively short periods of time provided for drawing-up and submission.

This approach is even more important for the companies that will not be subject to the tax audit until the end of 2017 and could subsequently face, at the beginning of 2018 the very difficult situation of having to conduct, besides all regular activities for the closure of financial statements and their auditing also the required effort to summarise information and documents required to draw-up the transfer pricing documentation.

Article published firstly on Avocatnet.ro.