The transfer pricing documentation file is the only tool by which companies can prove to authorities that they have carry out intra-group transactions at market prices by which they have not distorted the tax base.
According to the Romanian legislation, large taxpayers who carry out intra-group transactions have the obligation to prepare the transfer price file annually. The remaining taxpayers have the obligation to prepare the transfer pricing file only at the request of the tax authorities.
Note that although not all companies are required to prepare the transfer pricing file annually, they are nevertheless required to conduct intra-group transactions at market value.
The absence or not presenting on time the transfer pricing file gives the tax authorities the right to (i) apply fines of up to 27.000 RON, (ii) to make transfer pricing adjustments according to their own analyzes, and (iii) to calculate the additional profit tax on payment, penalties, late payments and interest which may later be difficult or sometimes impossible to challenge.
ATIPIC Solutions can assist you in preparing a transfer pricing file that is in line with transfer pricing legislation and ever-stricter documentation requirements and also meets the requirements of the most demanding tax inspectors.
Dac6 reporting of cross border arrangements
In 2018, EU issued the Directive 2018/822/EU, known as DAC6, which is introducing new reporting obligations of cross border arrangements that have certain characteristics (i.e. broadly, reporting of those transactions whose expected benefit is a tax advantage).
The final purpose of these new obligations and of the directive itself is increasing the transparency and fairness in taxation.
Therefore, any transaction involving two countries where one is in the EU will need to be assessed in order to determine whether it is reportable or not regardless it is intra-group or with third parties. Subsequently, those transactions that have the characteristics emphasized within the Directive 2018/822/EU will have to be reported to the tax authorities.
Companies carrying cross border transactions already need to have in place a systematic approach to capture, identify and monitor their reportable cross border arrangements designed, marketed or implemented from 25 June 2018 even though they will literally have to report these as of July 2020.
Failure to comply with DAC6 could mean facing significant sanctions under local regulations in European Union countries and reputational risks for individuals, businesses and intermediaries.
Therefore businesses need to understand the importance and implications of the directive and the need to act now to ensure compliance by the deadline in July 2020 especially taking into account that there will be a mandatory automatic exchange of information on such reportable cross-border schemes via the Common Communication Network (CCN) which will be set-up by the EU.
COUNTRY BY COUNTRY REPORTING (CBCR) AND NOTIFICATION
With the European Union's deadline for transposing EU 881/2016 into the mandatory tax information exchange (June 4, 2017), the EU member states have transposed the changes brought by this legislation at an accelerated pace in local legislation direction.
Without making any significant changes to the European text, by OUG 42/2017, the Government of Romania provides the premises for a new source of information that can be used in a tax audit or in preliminary risk analyzes to start tax inspections.
By interpreting the new legislation, it can be deduced that there are two types of companies in Romania:
(i) companies that have the obligation to submit a notification about the reporting entity for each country CbCR, ie any company that is part of a multinational group of companies with a consolidated turnover of more than 750 million EUR; and
(ii) companies that have the obligation to submit country-by-country reportng to CbCR in Romania, namely companies that are in the position of final parent companies, surrogate parent companies, group delegated entities, and reporting companies in the reporting countries with which Romania can not automatically exchange information either because it does not have an information exchange agreement signed either for other causes that can lead to systemic information exchange failure (e.g. lack of ISO data security certifications).
The failure to notify in time may bring fines of up to 5.000 RON, and failure to report on a country-by-country basis CbCR may impose fines of up to 100.000 RON even if failure occurs because of a systemic defeat to exchange information between states.
ATIPIC Solutions can assist with the preparation and submission of the CbCR notifications, with the preparation and submission of the CbCR report but also with the preparation of strategic analyses for determination of the countries where the CbCR report should be submitted as to avoid systemic failure generated by the failure of exchange of information between countries.
ADVANCE PRICING AGREEMENTS
Advance Pricing Agreements (APAs) are settlements on transfer pricing, entered into by a multinational taxpayer and at least one government administration. APA proceedings provide safety that tax authorities won’t
challenge the transfer prices as long as you respect the APA terms and make sure to file to the tax authorities the annual report on the implementation of the APA terms.
We can work with you to prepare and obtain an APA by guiding you through the whole process - from organising a preliminary meeting with the Romanian tax authorities, drafting the APA application, assisting you during the negotiations with the tax authorities to monitoring the ongoing compliance with the APA positions and preparing the annual report on implementation of the APA terms.
ASSISTANCE DURING TRANSFER PRICING AUDIT
As the debates on the transfer of profits by multinationals intensify, transfer pricing audits are also intensifying, and companies are therefore forced to increasingly support the transfer pricing file in front of tax authorities.
Since the tax authorities have requested the transfer pricing file, this is reviewed by a specialized transfer pricing team that may request additional information and additions.
Once the team that analyzed the transfer pricing file draws conclusions, they write a Draft of Fiscal Inspection Report on which the company can discuss with the tax inspection team and request a review of the conclusions. After reconsideration, the Fiscal Inspection team issues a Fiscal Inspection Report and the Imposition / Non-imposition Decision. As far as the company disagrees even this time, it can act in court.
Together with our collaborators, we can perform any kind of additional analyzes and additions to the transfer pricing file requested by the tax authorities, discuss with the tax authorities throughout the process, write the point of view, the appeal, and provide representation in court.
If you are already in the middle of a Transfer Pricing Audit and you are experiencing complex problems, we can offer you a free opinion within 24 hours on any price transfer issue (including on the transfer pricing conclusions in the Fiscal Inspection Report).
Benchmarking is of paramount importance to any transfer pricing analysis as economic references are critical justifying the income allocation within a group or for a specific intercompany transaction.
A benchmarking study done at an appropriate level of quality can serve not only in a transfer pricing project but also as a tool for analyzing competition and industry.
Our specialists have extensive experience in preparing of benchmarking studies for commercial, financial, and intangible asset transactions of all kinds.
Thus, we are proud of our ability to carry out customized benchmarking studies for all types of transactions that a company can carry out at a quality level that can not only help minimize transfer pricing risks but can also offer you an image of the competition and the situation of the industry in which you activate.
ATIPIC Solutions can assist you with preparing benchmarking studies both in a project to prepare the transfer pricing file and in separate projects.
TRANSFER PRICING POLICIES
Transfer pricing systems refer to the policies and procedures a company may put in place before the transaction happens in order to set the terms and conditions under which transactions between related parties are concluded.
Appropriate transfer pricing systems (i.e. policies and procedures) allow taxpayers to achieve consistency and transparency of terms and conditions under which transactions between related parties are concluded and consequently reduce the tax risks associated.
A comprehensive transfer pricing policy goes beyond mere compliance. The whole exercise of preparing a transfer pricing system provides taxpayers with an opportunity to review their commercial operations and international structure.
We can offer our support in structuring the activities, both cross-border and domestic, to develop and implement the optimal arrangements of activities from both operational and transfer pricing perspectives.
TRANSFER PRICING DOCUMENTS AND PROCESSES REVIEW
The transfer pricing review involves a review of the company’s transfer pricing framework including policies, processes / systems, accountability, people and monitoring relevant to setting the arm’s length prices through to recording the company’s international related party dealings in the ERP systems.
Within a transfer pricing review, we analyse inter-company agreements, existing transfer pricing documentation and internal policies, invoices and supporting documents to highlight any transfer pricing exposure.
Where appropriate, we recommend an alternative approach to the structuring of inter-company transactions.
By making a transfer pricing review you can (i) identify and understand areas of potential tax risk, (ii) mitigate the risks and undertake appropriate actions (iii) be ready to respond to any queries from the Romanian Tax Authorities and (iv) cross check whether your transfer pricing documentation is fully compliant with local regulations.
TRANSFER PRICING TRAININGS AND COURSES
Practical knowledge is of paramount importance in any transfer pricing exercise. One cannot perform transfer pricing analyses in current environment if it lacks experience in at least couple of similar projects.
For clients wishing to tackle by themselves transfer pricing issues, we offer tailore trainings and courses to help them understand the issues their industry is facing and how to tackle such issues. We can also tailor our trainings and courses based on the preferences of our clients.
TRANSFER PRICING SOLUTIONS FOR ACCOUNTING, AUDIT, TAX AND LEGAL TEAMS
We help professional services companies with setting up their internal transfer pricing teams or assisting their clients on transfer pricing matters. We can either take on the issue on our own or work in joint teams to provide clients with top class transfer pricing services.On the opposite side, we can just organize on the job training of your own staff by working together on a couple of projects both and making use of effective feedback techniques.
TRANSFER PRICING RISK ANALYSES
The objective of performing a transfer pricing risk assessment is to determine transfer pricing exposures without preparing a full transfer pricing file. Through a transfer pricing risk assessment a taxpayer can ensure if it is compliant
and if not to address the issues before the tax authorities start the formal audit.
We can undertake a transfer pricing risk assessment based on the OECD Guidelines which identifies a number of risk factors associated with an entity bearing a significant transfer pricing risk.
Our assessment will identify the risks, score them and make recommendations to mitigate these risks where necessary. Following the assessment the management can focus on taking proper measures to mitigate any current, historic and future risks.
We have developed optimal procedures and processes that we strictly respect within every project...
No matter the type of service we provide, first step is the to collect a preliminary set of information in an efficient face to face meeting with your team. During this meeting not only we will build a start-up strategy together, but we will also lay the grounds for the whole project.
ANALYSIS AND FIRST DRAFT
Based on the information gathered during meetings we will elaborate the analyses and start drafting the preliminary deliverables. After our internal quality control, we will deliver a first draft to be reviewed by the client.
After receiving the feedback from the client on our understanding of the facts presented in the draft, we will once more review from a technical perspective the entire project and if everything is accordingly, we will submit the final deliverable with all supporting documents.
We can travel and meet you wherever and whenever you need us. We strongly believe that this enhances your capability of making the best decisions at the proper moment.
In a fast paced world, our best-in-class procedures allow us to do our job in an utmost efficient manner, making sure we always meet even the tightest deadlines.
TRULY DEDICATED & OUTSTANDING
Perfectionists by nature, we offer high standards client service in order to keep our clients safe of any transfer pricing risks. We strive to find the proper solutions to even the most complex transfer pricing issues.
TRANSFER PRICING PARTNER
Viorel has experience especially in complex transfer pricing projects and in building defense strategies for transfer pricing audits. Previously he has been part of the local transfer pricing practice TPS and managed the BDO Romania transfer pricing team.
TRANSFER PRICING CONSULTANT
Mihaela has a year of experience in delivering transfer pricing projects. She is studying to obtain her master degree in Accounting, Controlling and Expertise from University of Economic Studies and to obtain the qualification of chartered accountant.
TRANSFER PRICING CONSULTANT
Stefania joined the ATIPIC Solutions transfer pricing team as a consultant, specialized in particular on providing assistance during transfer pricing audits. Stefania graduated the Faculty of Law and a Master's degree in Tax Law organized by the University of Bucharest.
TRANSFER PRICING CONSULTANT
Dragos joined ATIPIC Solutions team as a consultant, after completing an internship in the Romanian Parliament and another one in the Ministry of Foreign Affairs.
We are a team of young transfer pricing specialists united by the mindset - providing transfer pricing solutions in a completely refreshed, atypical manner. We use smart and efficient internal processes targeted to deliver measurable value to our clients.
We do not only address compliance transfer pricing issues but also issues related to the optimal transfer pricing management by offering our strategic advice and project management skills to both companies and consultants wishing to set up or refresh and improve their internal transfer pricing practice.
Our experience and knowledge with both local and international projects enable us to bring real value to our clients, streamline the transfer pricing processes, minimize transfer pricing risks and improve the burdensome compliance process.
Our clients appreciate us for our set of skills and values, but also because we enjoy working side by side with them in order to reach our goals.
We are committed into helping our clients to solve their issues and we are firm believers that face to face contact is still the way to go for a strong business partnership.
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WHO WE WORK WITH?
HOURS OF TRANSFER PRICING EXPERIENCE
TRANSFER PRICING AUDITS
TRANSFER PRICING FILES PREPARED
Because we always stick to our values, no matter the circumstances…
We are open to test new ideas. We are open to various forms of collaboration as to achieve optimal results with optimal resources, tailored to our clients needs.
We are driven professionals, faithfully devoted to providing the highest level of client service. All our reports are succesively reviewed by at least four eyes that eliminates the error risk.
We are not just consultants. We are real partners for our clients, true problem solvers, assertive and always responsive no matter the issues we are faced with.
We are completely independent from any audit firm or any network. This brings us the freedom to cooperate with only best-in-class professionals.
Because, at the end of the day, this is the only thing that matters ...
"We chose ATIPIC Solutions team because they proposed us a complete solution for the transfer pricing file that included the justification for the actual delivery and the analysis of the need for intra-group services. The tax inspection team has accepted the transfer pricing file exactly as it was prepared by ATIPIC Solutions. "
Chief Accountant, C T S Romania
"In search of a consultant to help us prepare the transfer pricing file, ATIPIC Solutions team was recommended to us. As we have been told, this team manages to ease the process simply by requiring and providing information in a very clear and structured way. We will certainly recommend their services further. "
Ana Mihaela Ionescu
Chief Financial Officer, Butan Gas Romania
"Professionalism, courtesy, real-time feedback and receptivity - are some of the attributes that characterize our collaboration with ATIPIC Solutions.
Thank you for your dedication and sympathy for the project that you have been doing together, as well as for the constant support you provide during the collaboration. "
Chief Financial Officer, Agro CS Romania
"Collaboration with ATIPIC Solutions was easy and constructive considering the complexity and novelty of the subject in our case. We were confronted with unusual situations, but the team supported us and explained every problem. In our future projects we will count on supporting ATIPIC Solutions."
Chief Accountant, Zanfir SNC
"ATIPIC Solutions has shown us at the tender stage that we will be able to rely on their promptness and especially that they are flexible enough and creative enough to find solutions to the price problems we face."
CFO, Ascendum Machinery
"We were glad to see that our project was managed from start to finish directly by people with seniority and experience in similar projects, which helped us to save time in communication throughout the project."
Chief Accountant, Romcap Condensatori
"I highly recommend the ATIPIC Solutions team, relying on the pleasant experience I had with working with them. We found an experienced team with trained people who managed to help us in a timely manner. Some professionals we'll work with."
Owner, Crama Gîrboiu
"At ATIPIC Solutions we found people who are open to help with everything they can, flexible people, creative people who have proposed optimal solutions to the situation we have faced, making us understand all the efforts to achieve project."
Owner, TGM Group
Because the proper information at the proper time can make the difference.…
”Although the legislative text specifically mentions that strict transfer pricing adjustments can not be made based on the simplistic information presented in the CbCR country reports, we expect a significant increase in the aggressiveness of the tax authorities towards the subsidiaries of the multinational groups that register in Romania losses, or fluctuating results. All these inspection or risk analysis actions will now be launched due the extensive use of country-specific CbCR reporting information” ... Read more
”Transfer pricing legislation is a highly interpretable one, often more important than how the law is read by a transfer pricing consultant is how well does a consultant know how tax inspectors interpret the law”... Read more
”With the outbreak of the Panama Papers, LuxLeaks and Paradise Papers scandals and the rush to implement all these new legislative changes, it is becoming clearer the movement to the next level of fiscal transparency, namely requiring multinational groups to make public these reports each country CbCR. However, it should not be overlooked that these measures can generate fierce disputes between governments of countries with low tax rates and those with high tax rates.” ... Read more
”In the following, we tried to meet the misgivings and confusion faced by any local entrepreneur when documenting about this subject .... First, it must be verified that the comparability study was done in databases which are also used by the tax inspection teams in the control activity and you have legal access to these databases both today and at the time of the tax inspection ... At the conclusion, it should be considered that lately the transfer pricing controls have intensified even for local entrepreneurs, but especially for companies with two or three years of losses in the open fiscal control period.”... Read more
The EU Directive 2018/822 creates a new tax transparency framework by introducing a new obligation to report cross-border arrangements which fall within certain "hallmarks".According to the text of the Directive, the obligation to report a cross-border arrangement may fall on either (i) a qualified intermediary e.g. consultants ...
It is also important to know that, even if there are few companies in European Union that have the obligation to file such report for each country - CbCR, each company part of a multinational group of companies with a consolidated turnover above EUR 750 million will......
Accountants and / or financial managers who have already been through the process of preparing the transfer pricing documentation know that it is not enough to subcontract this project to a specialized transfer pricing consultant and that they must also make significant efforts to provide information which in the end has to be p...
ATIPIC Solutions, an independent company exclusively specialized in transfer pricing consultancy, was recently accepted as member of Allinial Global (formerly PKF North America). Allinial Global is an association of independent accounting, audit, and consultancy companies with 437 offices throughout North America, Europe, Asia, ...
It is also important to know that, even if there are few companies in Romania that have the obligation to file such report for each country - CbCR, each company part of a multinational group of companies with a consolidated turnover above EUR 750 million will......
The adage that valuation is more of an art than a science is also applicable to transfer pricing. Tax authorities are challenging companies’ transfer pricing mechanisms at an increasing rate in hope of increasing tax revenue. Interpreting transfer pricing regulations is highly subjective and thus tax authorities are always going...
Transfer pricing can significantly impact the taxable base declared by taxpayers, including the taxes and duties paid to the state budget. In this context, the tax authorities all over the world are trying to protect their revenues. Therefore, in recent years, we witness more numerous transfer pricing audits...Ca regulă gene...
March 30, 2017
ATIPIC Transfer Pricing Solutions SRL, VAT RO37187430