S.C. Y S.R.L.
Object of activity: Manufacture of road motor vehicles (CAEN code 2910).
Period audited:
- 01.2016 – 31.12.2021: Income tax;
- 01.2016 – 30.06.2022: VAT.
The main observations of the tax inspection authorities were:
- Purchases of car maintenance and repair services: S.C. X S.R.L. has registered invoices for these services related to vehicles purchased mainly from the affiliated company X in Member State X, but also from other entities within the group, the costs being incurred for own use and for purposes other than the conduct of the company’s business.
- Payments of financial compensation: S.C. X S.R.L. made payments to various suppliers on the basis of conciliation agreements, due to the non-realization of forecast volumes as a result of a sudden drop in supply orders. Given the existing legal relationships with the affiliated contractors, production was based on the program provided by them, assuming limited risk. It has been established that the total amount of x lei deducted in the calculation of the tax result was deducted without complying with the legal provisions.
- Advertising and publicity expenses: the company registered expenses for the promotion of the products of group X on the Romanian market, which were not realized for its own interests, having limited functions and non-existent risks within the group.
- Personnel expenses “ISE”: These include labor costs and other costs assimilated to wage income, such as transportation costs of personal and household goods, directly related to personnel relocated from other entities of group X to plant X.
- Invoices for intra-group services: The Company has registered numerous invoices for intra-group services regularly billed by affiliated entities, representing marketing expenses, various awards, bonuses, contributions, litigation and anti-Covid protection materials.
Value added tax:
- Purchases of vehicles and car maintenance services: the company has registered invoices for the purchase of vehicles brand X and related car maintenance and repair services, deducting VAT in the total amount of x lei, purchases made for the provision of third parties and employees of the sales department, free of charge.
- Invoices for intra-group services: the Company has registered invoices for intra-group services on a chargeable basis with the application of the reverse charge mechanism, with services being invoiced regularly by affiliated entities, representing various marketing expenses, prizes, bonuses, contributions, litigation and anti-Covid protection materials.
- Expenses for missing raw materials: the Company has registered in its accounting and tax records expenses for missing raw materials.
- Export operations: The company registered 31 invoices representing the value of deliveries of new cars, treated as domestic deliveries and therefore taxable.
Source: ANAF