The EU Directive on Mandatory Disclosure Rules (MDR) also known as “DAC6” has been implemented into Romanian law through Ordinance no. 5/2020. As expected, its provisions will apply starting from July 2020, but its effects are of a retroactive nature.
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.
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?
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:
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.
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:
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:
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:
What if no reporting is carried out?
The following penalties will apply:
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).
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