Transfer pricing is a complex but extremely important tax area for any company that conducts transactions with affiliated entities. There are many myths surrounding this topic that create confusion and can expose businesses to fiscal risks and significant penalties.

Below, we have selected some of the most widespread myths and explained them simply, with practical examples.

Myth 1: “Only large multinationals have to prepare a transfer pricing file.”

Reality: The obligation arises depending on the value of transactions with affiliates and the taxpayer category (large, medium, small). Even smaller Romanian companies may be required to prepare the documentation if they exceed the thresholds set by law.

Myth 2: “If I only have transactions in Romania, I don’t need a transfer pricing file.”

Reality: The regulations apply to any transactions with affiliated persons, even if all the companies involved are from Romania.

Myth 3: Adjustments between Romanian affiliated entities are mirrored, so I have no risk. Nothing could be further from the truth. If the transactions are large and the affiliated entities recording the expense are at a loss, while those recording the revenue are profitable and are adjusted by the tax inspection teams, the latter will face a positive fiscal adjustment, while the loss-making entities will increase their loss. In some cases, the additional amounts to be paid have reached tens of millions.

Myth 4: “If I have contracts between affiliates, I no longer need to justify prices.”

Reality: The authorities require proof that the prices are at arm’s length, meaning similar to those applied between independent companies. A contract helps, but without comparability studies and financial analyses, it is not enough.

Myth 5: “Transfer pricing is just an accounting matter.”

Reality: Transfer pricing involves fiscal and legal strategy. It includes economic analyses, benchmarks, internal policies, and complex documentation. It is not just an “accounting paper.” Accountants cannot prepare such analyses and usually need the support of tax consultants.

Myth 6: “If I have losses, I don’t have to prepare a transfer pricing file.”

Reality: ANAF particularly inspects companies with losses, precisely to analyze whether the losses result from transactions with affiliates.

Myth 7: “The transfer pricing file is prepared only during an audit.”

Reality: Legislation sets clear deadlines for submitting the file, and its absence can lead to significant fines. Moreover, preparing it in advance helps avoid costly fiscal adjustments.

Myth 8: “If I have many small transactions, it doesn’t matter.”

Reality: ANAF can aggregate transactions of the same type. Multiple small contracts with the same affiliated company can exceed the threshold and require the company to prepare the file.

Transfer pricing should not be seen as a bureaucratic formality but as a mechanism for fiscal compliance and transparency. Myths and incomplete information can lead to poor decisions and major financial risks.

What can you do as an entrepreneur or manager?

• Check whether your company’s transactions exceed the legal thresholds;

• Analyze whether your intercompany pricing policies are aligned with market levels;

• Consult a tax specialist to avoid unpleasant surprises in case of an audit.

Proper information and timely preparation are the best defense against fiscal adjustments and penalties.