Tax Flash No. 1/2020
Government Ordinance 5/2020 for amending and supplementing Law 207/2015 regarding the Fiscal Procedure Code, was published in the Official Gazette 68/2020
The Government Ordinance transposes into the Romanian legislation Directive 2018/822 amending Directive 2011/16 regarding the automatic mandatory exchange of information in the fiscal field regarding the cross-border modalities that are subject to reporting (“DAC 6”).
Among the main novelties, we hereby mention:
- establishing the intermediaries’ obligation to report to the tax authorities information on certain cross-border arrangements that could be used to obtain tax advantages;
- “intermediaries” are defined as any person who directly or through other persons, designs, markets, organizes, makes available for implementation or manages the implementation of a cross-border arrangement that is the subject of reporting;
- the reporting obligation is transferred to the taxpayer who benefits from a cross-border tax arrangement and which could generate a tax advantage, insofar as the taxpayer conceives and implements a cross-border scheme alone;
- intermediaries or taxpayers, as the case may be, must declare to the tax authorities only those cross-border arrangements that have certain characteristics and elements (distinctive signs) that offer indications on avoiding tax obligations or obtaining a tax advantage, such as: intra-group transfers of intangible assets that are difficult to valuate, the acquisition of companies that record losses and the use of losses to reduce tax obligations, conversion of income into capital or categories of income that are tax exempt etc.;
- hallmark is defined as a characteristic or appropriateness of a cross-border arrangement that presents an indication of a potential risk of tax avoidance. Hallmarks are presented in Annex 4 to the Fiscal Procedure Code.
- the relevant intermediaries and taxpayers report until August 31, 2020, the cross-border arrangements that are subject to reporting, for the period between June 25, 2018 and July 1, 2020. Subsequently, intermediaries/taxpayers will be required to report within 30 days, the information regarding the cross-border arrangements that are subject to reporting;
- the template of the form through which the intermediaries or taxpayers will fulfil their reporting obligation will be published later. Moreover, the tax authorities will also develop a guide to detail the aspects regarding the application of the provisions regarding the hallmarks that the relevant intermediaries or taxpayers use in order to establish whether the cross-border arrangements must be reported;
- the sanctions for non-complying with the reporting obligations are between lei 5,000 and lei 100,000;
- the provisions of the Ordinance shall apply starting July 1, 2020.