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DAC6 Directive is transposed into Romanian legislation

In this issue:

Government Ordinance no. 5/2020 for the amendment and completion of Law no. 207/2015 regarding the Tax Procedure Code, published in the Official Gazette no. 68 of 31 January 2020

Transposition into Romanian legislation of the provisions of the EU Directive requiring the disclosure of certain cross-border tax arrangements (DAC6 Directive)

On 28 January 2020, the Romanian Government approved the Government Ordinance no. 5/2020 designed to transpose into the Tax Procedure Code the provisions of DAC6 Directive.

The provisions introduced will enter into force starting 1 July 2020 and they are broadly aligned with those already existing in the DAC6 Directive.

We remind you briefly what the implementation of the DAC6 Directive in Romania implies:

  • The reporting obligation (for intermediaries but also, under specific cases, for taxpayers) of any potentially aggressive cross-border tax-planning arrangements, which are identified based on certain criteria named hallmarks, is introduced;
  • A hallmark is a characteristic or a feature of a cross-border arrangement which presents an indication of a potential risk of tax avoidance. The hallmarks introduced in the Romanian tax legislation are aligned to the ones from the DAC6 Directive;
  • The reporting deadline is within 30 days of a triggering event (for example, from the moment the first step was taken in the implementation of the cross-border arrangement). There is also a retroactivity clause, according to which intermediaries or relevant taxpayers are required to report the cross-border arrangements for the period between 25 June 2018 and 1 July 2020 by 31 August 2020;
  • The information that will have to be reported to the tax authorities includes, among others, the intermediary/taxpayer’s identification data, details on the hallmark used to determine the reportability of the arrangement, a summary of the arrangement content, its value, etc.;
  • After collecting the reports from intermediaries and taxpayers, Romania will perform the automatic exchange of information with the other Member States within a month from the end of the quarter in which the information was reported. The first exchange of information will take place by 31 October 2020.
 

The following sanctions were introduced for non-complying with the above-mentioned provisions:

  • fine between RON 20,000 and RON 100,000 for non-reporting or late reporting by intermediaries or relevant taxpayers of the reportable cross-border arrangements;
  • fine between RON 5,000 and RON 30,000 for non-fulfillment by the intermediary of the obligation to notify another intermediary or the relevant taxpayer.
 

For more details on the reporting obligations, the hallmarks or the scope of the reporting requirements of the Directive, please refer also to our tax alert no. 41 of 28 November 2019.

Prepared by:
Miruna Enache – Partner, Tax and Law Department, Transaction Tax Leader
 
For additional information, please contact:
Alex Milcev – Partner, Tax & Law Leader Romania
 
Ernst & Young SRL
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