As reported by CECCAR Business Magazine, the Order of the Minister of Finance No. 1.730/2023 for the regulation of some accounting aspects was recently formalized. We present below the provisions of the normative act.

I. Amendments to the Accounting Regulations regarding the individual annual financial statements and the consolidated annual financial statements, approved by OMFP No. 1.802/2014

1. Regarding the obligation to submit the Report on the profit tax (point 592⁵ of the Regulations)

a) Medium and large subsidiaries, which are controlled by a final parent company that does not fall under the legislation of an EU member state, when the consolidated revenues exceeded on the date of its balance sheet, for each of the last two consecutive financial years, the amount of RON 3,700,000,000, as reflected in the consolidated annual financial statements, have the obligation to publish and ensure access to a report on the information regarding the profit tax concerning the said final parent company for the most recent of the respective two consecutive financial years.

What has changed: Consolidated net turnover has been replaced by „consolidated revenues”.

b) In the case of a group whose final parent company is from a third country, the obligation to publish the profit tax report can be fulfilled by any affiliated entity within the group, included in the scope of applicability of these regulations.

New provision introduced in the Accounting Regulations!

2. Regarding the content of the Profit Tax Report (point 592⁹ of the Regulations)

The following provisions were introduced:

a) If the financial reporting framework applicable to the preparation of the annual financial statements does not define the net turnover indicator, the revenues that must be presented according to this section correspond to the revenues, as they are defined by the IFRS/financial reporting framework based on which the annual financial statements are drawn up, except for value adjustments and dividends received from affiliated entities.

b) In order to avoid reporting the amount of accumulated earnings several times, the amount of accumulated earnings of an entity that opened the branch must be attributed to the tax jurisdiction where that entity is based. That jurisdiction may be located in the EU or in a third country. The provisions of this paragraph apply regardless of whether the branches are opened in one or more member states.

c) If the activities of several affiliated entities may be subject to the obligation to pay profit tax within a single tax jurisdiction, the information attributed to that tax jurisdiction is the sum of the information related to such activities of each affiliated entity and their branches in the respective tax jurisdiction. If several affiliated entities generate taxable income in a territory to which a single fiscal regime corresponds, the reported information is determined by aggregating the information corresponding to all affiliated entities and branches subject to that fiscal regime.

d) No information regarding a specific activity is assigned simultaneously to several tax jurisdictions. In the sense of this provision, when establishing a certain activity, the place where that activity is conducted is considered. Since the income information refers to the operations of an entity established on the territory of a country, subject to a single tax regime, they are attributable only to that tax regime.

e) When an entity that omitted the presentation of information resumes their presentation within the five-year period, the published report will include information corresponding to the current financial year and previous financial years for which it did not publish information.

II. The Accounting Regulations in accordance with the International Financial Reporting Standards, approved by Order of the Minister of Public Finance no. 2.844/2016, have also been amended accordingly.

III. Additions to the Order of the Minister of Finance No 2.048/2022 regarding the completion of accounting regulations applicable to economic operators

The following regulations were introduced:

Provisions for a final parent company whose financial year coincides with the calendar year

1. For a final parent company whose financial year coincides with the calendar year, the first reporting year corresponds to the financial year of 2023, the report on the information regarding the profit tax being published no later than December 31st, 2024.

2. In applying the provisions of point 1, to determine whether the parent company has a reporting obligation in the first year of application of the provisions of this order, it determines whether the consolidated revenues exceed the amount of RON 3,700,000,000, both in the financial year of 2022 and in the financial year 2023. The final parent company prepares the report on the information related to the profit tax for the financial year 2023 if the consolidated revenues exceed the respective amount in both financial years.

3. The provisions of points 1 and 2 also apply in the case of an autonomous entity.

Special provisions

1. For a final parent company whose financial year corresponds, for example, to the period April 1st, 2023 - March 31st, 2024, the first reporting year corresponds to March 31st, 2024, the report on the profit tax information being published at the latest until March 31st, 2025.

2. In applying the provisions of point 1, to determine whether the parent company has a reporting obligation in the first year of application of the provisions of this order, it determines whether the consolidated revenues exceed the amount of RON 3,700,000,000, both in the financial year ended on March 31st, 2023, as well as in the financial year ended on March 31st, 2024.

Example of how to analyze the reporting obligation

The following evolution of the consolidated revenues of the final parent company, based in Romania, is considered: over the amount of RON 3,700,000,000 in the financial years 2022 and 2023; under the amount in the financial year of 2024; over the amount in the financial year of 2025; under the amount of RON 3,700,000,000 in the financial year of 2026. Therefore, reporting obligations exist for each of the financial years of 2023, 2024, 2025 and 2026.

Important!

– The obligation to draw up the report on the profit tax information refers to the current financial year, without imposing the presentation of information corresponding to the financial year preceding the reporting one.

– In the case of an autonomous entity, the amount of RON 3,700,000,000 lei corresponds to its individual income, as reflected in its annual financial statements.

– In order to fulfill the reporting obligations provided by this order, the reference to EU entities considers entities registered in the European Economic Area. As a result, the reports on the profit tax information must present information at the level of the states of the European Economic Area.

– The reporting entities consider the activities in the states of the European Economic Area similar to those in another member state. For reporting purposes, entities based in a country in the European Economic Area are considered to be based in a member state, and not in a third country.

– When reporting the information provided by this order, the format established by the European Commission, adopted pursuant to art. 48c paragraph (4) of Directive 2013/34/EU is used.

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