New CbCR requirements for groups with an establishment in Romania

In 2021, the EU Directive on Public Country-by-Country Reporting (“CbcR”) obligation came into force, by making it mandatory for certain companies to publicly disclose tax and other economic data. With public CbCR, multinational enterprises face increased pressure in terms of tax transparency. The rules apply to EU headquartered groups with consolidated turnover in excess of EUR 750 million, however, it does not apply to banks and financial institutions.

The Romanian Government recently formally introduced the EU public country-by-country (CbC) requirements, transposing into the national legislation the provisions of EU Directive 2021/2101.

Order 2048/2022 requires qualifying Romanian-based multinational enterprises and multinational enterprises with subsidiaries or branches in Romania, irrespective of whether these are EU or non-EU headquartered groups, to publicly disclose certain information on a country-by-country basis. The threshold of the annual consolidated revenue is of RON 3.7 billion (equivalent of EUR 747,474,740) in each of the last two consecutive financial years.

Effective as of financial years beginning on or after January 1, 2023

The new legislation is effective starting January 1, 2023 and applies to financial years beginning on or after January 1, 2023 (which is earlier than the June 22, 2024 deadline set by the EU Directive). Following these amendments, Romania becomes the first EU Member State to officially introduce public CbC reporting obligations, with a deadline for the CbC preparation and public disclosure significantly earlier than that set by the EU Directive.

Recommended action points

Qualifying multinational enterprises operating in Romania and Romanian-headquartered groups should be preparing the required CbC disclosure and consider how their CbC data may be interpreted. Complying with the additional public CbC requirements should be considered in the broader context of a group’s overall tax strategy and tax governance. Given the increased public disclosure regarding a group’s tax position and potential impact on interested stakeholders, including investors and NGOs, companies should start now to develop their tax transparency strategy.

To find out more: Public country-by-country reporting: Tax transparency and CSR