The new rule proposed by the Ministry of Finance to tax all companies in Romania that are part of a national or international group becomes a serious deviation in fiscal legislation and risks creating the conditions for the rejection of integrated business models, widely used in the European and global economy.
„Essentially, the new rule proposed by the Ministry of Finance imposes additional taxes on all companies in Romania that are part of a national or international group, not for their lack of profitability in Romania, but simply because they conduct economic and financial operations within the group, including financing.
It is as if through an "original" fiscal instrument like a guillotine, we intervene and even make the normal functioning of the most widely used business model in the world impossible, and this not only contradicts the established and well-known rules and principles of the EU and OECD, but also other international treaties to which Romania is a party, including the EU Accession Treaty," stated Doru Dudaş, former vice president of ANAF and director general at the Ministry of Finance, current president of the CCF fiscal committee, in a press release.
According to the cited source, the proposed rule no longer corrects the deviations of taxpayers but becomes a deviation itself in fiscal legislation, which has no equivalent in the European and international context.
"The explanatory note of the proposal refers to the 3% rate used in the USA under the so-called BEAT (base erosion anti-abuse tax, a tax confirmed in the recent OBBBA - One Big Beautiful Bill Act). To clarify this attempt to show that a mechanism used by the USA has been adopted, namely a good practice, we must specify that any comparison is completely gratuitous and unfounded, as the BEAT threshold is calculated by relating to the entire deductible expense base of a company (not just those of the same nature as stipulated in the project proposed by the Ministry of Finance), and the amount exceeding this threshold is taxed at a minimum level, not at the general corporate tax rate," noted CCF.
Negative Economic Effects for Romania
On this subject, Adrian Luca, first vice president in the CCF's high council, stated that the Ministry of Finance's proposal radically changes the calculation formula but artificially maintains the 3% rate from the American model, using it for a different purpose than the BEAT mechanism to which it refers.
"Even in the case of the 3% threshold applied in Poland for so-called transferred profits, the calculation formula takes into account the entire mass of potentially deductible expenses and applies only to transactions with non-resident partners from non-cooperative or very low-tax jurisdictions, not to all natural and correct transactions with all affiliates, including those with affiliates resident in Romania.
Therefore, the Ministry of Finance's proposal does not actually adopt either the American or Polish mechanism, but only the 3% rate, applied "originally" after a different calculation formula and for a completely different purpose, with evident negative economic effects for Romania," as stated in the cited press release.
According to the CCF, it is at least contradictory for a foreign investor that, if they do not provide documents, they can deduct 50% of insignificant expenses with the company car, but if they bring financing of tens of millions of euros and absolutely necessary services for the development of the Romanian branch at a fair price based on documents and well-founded analyses, they pay the correct tax to the state and cannot deduct any of these expenses.
"Simply put, we reach the absurd situation where the investor is penalized simply for being part of a group. Essentially, the proposal risks creating the conditions for the rejection of integrated business models, widely used in the European and global economy, by unjustifiably limiting their use in Romania.
A company that can demonstrate, based on documents and well-founded analyses, why it is more advantageous and, in many cases, has no other alternative than borrowing from the group (because it cannot find on the market that mix of loan value-price-conditions), will end up unable to deduct financing costs. This practically means the loss of any external competitiveness for companies in Romania and the blocking of funding for a large part of serious companies in Romania," experts believe.