The Ministry of Finance introduces a change in the field of international taxation through new regulations targeting Advance Pricing Agreements (APA) and the mutual agreement procedure for avoiding double taxation. These changes were formalized by Ordinance no. 11/2025, published in the Official Gazette and recently approved by the Government.

One of the most notable provisions is the possibility for an advance pricing agreement to be applied retroactively, for a period of up to five years prior to the filing of the request (equivalent to the tax statute of limitations).

“This is a novelty with significant implications, especially for groups of companies that carried out complex intra-group transactions in previous years and now want the possibility to secure a stable tax treatment even for that period. In practice, this fiscal rollback gives them the chance to avoid the risk of subsequent adjustments by tax inspectors and to voluntarily correct their tax position under controlled conditions,” said Alina Andrei, partner at Cabot Transfer Pricing.

This retroactive application option provides companies with a clear and legal path to secure their tax position for previous years, avoiding potential future adjustments by tax inspectors and contributing to the strengthening of voluntary compliance.

In addition to this major change, another key provision introduced by Ordinance no. 11/2025 concerns the possibility of suspending tax inspections at the time an APA request is filed. This measure offers a period of “tax protection” during which the taxpayer can work together with the authorities to reach an amicable solution, without the imminent pressure of an inspection, according to Cabot Transfer Pricing. Thus, taxpayers who act in good faith and voluntarily initiate this procedure are encouraged and protected, instead of being penalized.

But what happens if a company applying for a retroactive APA reports losses during the statute of limitations period (high tax risk)?

There still remains a risk of tax adjustment (if the loss is due to intra-group flows), and any retroactive application of an APA will likely require a voluntary adjustment.

APA or transfer pricing file – what should companies choose?

The efficiency of an APA must be analyzed for each taxpayer and for each intra-group flow, depending on the taxpayer category, the materiality of the intra-group transaction (e.g., affiliate revenues/expenses accounting for more than 50% of turnover/total expenses), and potential tax adjustments if the arm’s length principle has not been respected.

Thus, according to Article 52, para. 17 of the Fiscal Procedure Code, the issuance of an advance pricing agreement (APA) for a single category of intra-group transaction is subject to an issuance fee of:

• €20,000 for large taxpayers for issuance, and €15,000 for modification;

• €10,000 for other categories of taxpayers for issuance, and €6,000 for modification.

The requesting taxpayer is entitled to a refund of the fee paid if the competent tax authority rejects the issuance/modification of the advance pricing agreement.

Another major element of the legislative package is the revision of the mutual agreement procedure for avoiding double taxation. Currently, Romanian tax authorities manage a significant number of requests in this area, but the resolution period is often very long. The new regulations aim to simplify procedural steps, eliminate ambiguities, and strengthen the implementation of amicable decisions agreed with other states.

Article sourced from bizlawyer.ro