S.C. X S.R.L. has as its object of activity “Manufacture of other parts and accessories for motor vehicles and their engines”, CAEN code 2932.
Period audited: 01.04.2019 – 31.12.2022.
The main conclusions of the tax inspection authorities were:
As a result of the audit, it was found that S.C. X S.R.L. carried out intra-group transactions involving both purchases of raw materials, semi-finished products and equipment necessary for the performance of production operations from affiliated companies, and sales of finished products, fixed assets and equipment to affiliated entities, which were not made at market price.
Depending on the needs identified at the level of S.C. X S.R.L. and the X group, during the period under analysis, S.C. X S.R.L. was also involved in other types of intra-group transactions related to production operations, such as rental services, equipment, consultancy, processing, technical support, cost re-invoicing, and loans for financing the activity.
From the analysis of the data in the Transfer Pricing File, submitted by the audited company for the period 2019-2022, regarding its business strategy, it was found that S.C. X S.R.L. followed the strategy established at the level of group X, producing both for the affiliated company and for the customers negotiated by the parent company, the production activity of S.C. X S.R.L. being controlled by the parent company.
Thus, the tax inspection authorities proceeded to adjust the income realized by S.C. X S.R.L. from the production activity controlled by the affiliated company Y.
Also, from the analysis carried out, taking into account the perspectives of the lender and the borrower, of the relevant elements regarding the purpose and economic content of the financial transactions between the parties, the tax inspection authorities found that the amounts granted as loans by the sole shareholder of S.C. X S.R.L. were, in fact, in terms of economic content, contributions to the capital of the Romanian company and not loans. This resulted from the behavior of the parties to convert these amounts (including the interest calculated) into capital and not to behave in a similar way to independent persons carrying out financial transactions in the form of loans.
Following the delimitation of the transaction as a capital contribution, the tax inspectorates proceeded to adjust the interest expenses by reducing the total amount calculated as interest on the loan granted by the parent company.
As a result of the tax inspection, the control bodies additionally established the amount of x lei, representing corporate income tax, and reduced the tax loss by x lei. The precautionary measures were instituted, and the Decision on instituting precautionary measures No. –/01.04.2024 for the amount of x lei was issued.
Source: ANAF