In the Official Gazette (Part I) no. 559 of 21 June 2023 was published the Order of the Ministry of Finance no. 1730 regulating certain accounting issues.
- Amendments and additions – Accounting regulations approved by OMFP 1802/2014:
- Changes relating to the submission of the Corporation Tax Report (point 592_5 of the Implementing Rules):
- a) Medium-sized and large subsidiaries, which are controlled by a ultimate parent company that is not subject to the legislation of an EU Member State, where consolidated revenues have exceeded at the balance sheet date or, for each of the last two consecutive financial years, the amount of 3,700,000,000 lei, as reflected in the annual consolidated financial statements, are obliged to publish and provide access to a report on corporate tax information on that ultimate parent company for the most recent of those two consecutive financial years.
Modification: Consolidated net turnover has been replaced by “consolidated revenue”..
- b) In the case of a group whose ultimate parent company is from a third country, the obligation to publish the corporation tax report may be fulfilled by any affiliated entity within the group that falls within the scope of these regulations.
Modification: Newly introduced provision in the accounting legislation.
Changes related to the content of the Corporation Tax Report (item 592_9 of the Regulations):
The following provisions are introduced:
- Where the financial reporting framework applicable to the preparation of annual financial statements does not define the indicator net turnover, the revenue to be disclosed under this section corresponds to revenue as defined by IFRSs/the financial reporting framework on the basis of which the annual financial statements are prepared, except for value adjustments and dividends received from affiliated entities.
- In order to avoid multiple reporting of the amount of retained earnings, the amount of retained earnings of an entity that has opened a branch should be attributed to the tax jurisdiction in which that entity is based. That jurisdiction may be located in the EU or in a third country. The provisions of this paragraph shall apply irrespective of whether branches are opened in one or more Member States.
- Where the activities of more than one related entity may be subject to corporation tax in a single tax jurisdiction, the information attributed to that tax jurisdiction shall be the sum of the information relating to such activities of each related entity and its branches in that tax jurisdiction. If more than one affiliated entity generates taxable income in a jurisdiction to which a single tax regime applies, the information reported is determined by aggregating the information corresponding to all affiliated entities and branches subject to that tax regime.
- No information relating to a particular activity is attributed to more than one tax jurisdiction simultaneously. For the purposes of this provision, the place from which the activity is conducted is taken into account when determining a particular activity. Since the information on income relates to the operations of an entity established in the territory of a country, subject to only one tax regime, it is attributable only to that tax regime.
- Where an entity that has omitted to report resumes reporting within the five-year period, the published report will include information for the current and previous financial years for which it has not reported.
- The Accounting Regulations in accordance with the International Financial Reporting Standards, approved by the Order of the Minister of Public Finance no. 2.844/2016, are amended accordingly.
- Additions to OMF no. 2048/2022 on the completion of the accounting regulations applicable to economic operators:
OMF 1730/2023 introduces the following regulations:
Provisions for a final parent company whose financial year coincides with the calendar year
- For a ultimate parent company whose financial year coincides with the calendar year, the first reporting year corresponds to the financial year of 2023, with the report on corporate tax information being published at the latest by 31 December 2024.
- In application of the provisions of point 1, in order to determine whether the parent company has a reporting obligation in the first year of application of the provisions of this Order, it shall determine whether the consolidated revenues exceed the amount of 3,700,000,000 lei, both in the financial year of 2022 and in the financial year of 2023. The ultimate parent company shall prepare the report on information on corporate income tax for the financial year of 2023 if the consolidated income exceeds the respective amount in both financial years.
- The provisions of point 1 and 2 shall also apply in the case of an autonomous entity
Special provisions:
- For a ultimate parent company whose financial year corresponds, for example, to the period 1 April 2023 – 31 March 2024, the first reporting year corresponds to 31 March 2024, with the report on corporation tax information being published by 31 March 2025 at the latest.
- In application of the provisions of point 1, in order to determine whether the parent company has a reporting obligation in the first year of application of the provisions of this Order, it shall determine whether the consolidated income exceeds the amount of 3,700,000,000 lei, both in the financial year ending on 31 March 2023 and in the financial year ending on 31 March 2024.
Example of how to analyse the reporting obligation:
The following evolution of the consolidated revenues of the ultimate parent company, based in Romania, is considered: above the amount of 3,700,000,000 lei in the financial years 2022 and 2023; below the amount in the financial year 2024; above the amount in the financial year 2025; below the amount of 3,700,000,000 lei in the financial year 2026. Therefore, reporting obligations exist for each of the financial years 2023, 2024, 2025 and 2026.
Reporting entities with a financial year different from the calendar year:
If a reporting entity has a financial year other than a calendar year, the financial year of the income tax information report must correspond to the financial year of the annual consolidated financial statements.
A reporting subsidiary whose financial year is different from that of the ultimate parent company fulfils its reporting obligations on the basis of a report corresponding to the financial year of the ultimate parent company, and not to its own financial year.
The reporting entities mentioned above publish the report on information relating to corporation tax within 12 months of the date to which the consolidated annual financial statements relate.
In the case referred to in this Article, the first tax information report shall be published for a financial year beginning after 1 January 2023.
Important aspects!
The obligation to report information on corporate income tax relates to the current financial year, without requiring the presentation of information corresponding to the financial year preceding the reporting year.
In the case of an autonomous entity, the amount of 3,700,000,000 lei corresponds to its individual income as reflected in its annual financial statements.
For the purpose of fulfilling the reporting obligations provided for in this Order, the reference to EU entities refers to entities registered in the European Economic Area. As a result, reports on corporate tax information must present information at the level of the European Economic Area states.
Reporting entities consider the activities in the European Economic Area states similar to those in another Member State. For reporting purposes, entities established in a European Economic Area country are considered to be established in a Member State and not in a third country.
When reporting the information provided for in this Order, the format established by the European Commission, adopted pursuant to Article 48c paragraph (4) of Directive 2013/34/EU, shall be used.
Legal basis:
– MF Order no. 1730/2023 regulating certain accounting issues;
– MF Order no.2048/2022 on the completion of accounting regulations applicable to economic operators;
– MFP Order no. 1802/2014 for the approval of the Accounting Regulations on individual annual financial statements and consolidated annual financial statements;
– MFP Order no.2844/2016 for the approval of the Accounting Regulations in compliance with the International Financial Reporting Standards.