Based on the actions recently announced by tax authorities that have concluded a cooperation agreement with NCSP (National Commission for Strategy and Prognosis) - which is primarily aimed to select taxpayers subject to tax audits - we bring to your attention the main deadlines and obligations of the first quarter of the year:
1. Preparation and submission of the Annual Corporate Income Tax Return - Deadline: March 25th
Besides the monthly tax statements, the month of March brings for the majority of taxpayers an additional main obligation - to prepare and submit the Annual Corporate Income Tax Return.
In this context, special attention shall be paid to the new mechanism for computing the deductible interest expenses based on the exceeding borrowing cost concept introduced further to transposing the EU Anti-Tax Avoidance Directive into our domestic law. We reiterate the fact that, starting 2018, the former thin-capitalization rules were repealed, being replaced by the new rules which are applicable to any loans or any other financing sources irrespective of whether contracted from banks / (non)financial institutions or from related parties, save for the case when the taxpayer is an independent entity.
In addition, having in mind the year-end obligation to perform the stocktaking, the following topics have been highly scrutinized by the tax authorities during tax audits: missing inventory/fixed assets items, technological losses, perishable inventories. Therefore, it is highly recommendable to have an assessment of the applicable tax treatment.
Last but not least, in the area of service fees deductibility, we underline the importance of ensuring that robust supporting documentation is available at the level of the company, attesting that the services were rendered and necessary, especially in the area of intra-group services.
FiNEXPERT may assist you in reviewing the corporate income tax computation as well as in establishing the tax treatment applicable to complex transactions / cases for an accurate corporate income tax computation.
2. Preparation or update of the Transfer Pricing Documentation File
Large taxpayers are required to prepare the transfer pricing documentation file until the deadline for submitting the corporate income tax return, if the transactions carried out with related parties, whose total annual value, excluding VAT, is higher or equal to one of the following materiality thresholds:
The transfer pricing documentation file can be requested by the tax authorities both under a tax audit, as well as outside the scope of a tax audit upon the written request.
Large taxpayers not falling under the criteria mentioned above as well as those qualifying as small and medium-sized taxpayers are required to prepare the transfer pricing documentation file only within the context of a tax audit, if the transactions carried out with related parties at annual level exceeds the following materiality thresholds:
Taxpayers who do not fall under any of the above mentioned cases are required to document the compliance with the arm's length principle according to the financial-accounting and tax regulations in force. Thus, even though they are not required to draft a Transfer Pricing File containing the mandatory information required by the law, they still need to prepare a documentation for the transactions carried out with their related parties.
For any questions regarding the information included in this leaflet, please feel free to contact us and one of our team members will contact you shortly.
1. Preparation and submission of the Annual Corporate Income Tax Return - Deadline: March 25th
Besides the monthly tax statements, the month of March brings for the majority of taxpayers an additional main obligation - to prepare and submit the Annual Corporate Income Tax Return.
In this context, special attention shall be paid to the new mechanism for computing the deductible interest expenses based on the exceeding borrowing cost concept introduced further to transposing the EU Anti-Tax Avoidance Directive into our domestic law. We reiterate the fact that, starting 2018, the former thin-capitalization rules were repealed, being replaced by the new rules which are applicable to any loans or any other financing sources irrespective of whether contracted from banks / (non)financial institutions or from related parties, save for the case when the taxpayer is an independent entity.
In addition, having in mind the year-end obligation to perform the stocktaking, the following topics have been highly scrutinized by the tax authorities during tax audits: missing inventory/fixed assets items, technological losses, perishable inventories. Therefore, it is highly recommendable to have an assessment of the applicable tax treatment.
Last but not least, in the area of service fees deductibility, we underline the importance of ensuring that robust supporting documentation is available at the level of the company, attesting that the services were rendered and necessary, especially in the area of intra-group services.
FiNEXPERT may assist you in reviewing the corporate income tax computation as well as in establishing the tax treatment applicable to complex transactions / cases for an accurate corporate income tax computation.
2. Preparation or update of the Transfer Pricing Documentation File
Large taxpayers are required to prepare the transfer pricing documentation file until the deadline for submitting the corporate income tax return, if the transactions carried out with related parties, whose total annual value, excluding VAT, is higher or equal to one of the following materiality thresholds:
- EUR 200,000 in case of interest expenses incurred for financial services;
- EUR 250,000 in case of provision of services;
- EUR 350,000 in case of transactions involving purchases/sales of tangible or intangible assets.
The transfer pricing documentation file can be requested by the tax authorities both under a tax audit, as well as outside the scope of a tax audit upon the written request.
Large taxpayers not falling under the criteria mentioned above as well as those qualifying as small and medium-sized taxpayers are required to prepare the transfer pricing documentation file only within the context of a tax audit, if the transactions carried out with related parties at annual level exceeds the following materiality thresholds:
- EUR 50,000 in case of interest costs incurred for financial services;
- EUR 50,000 in case of provisions of services;
- EUR 100,000 in case of transaction involving purchases/sales of tangible or intangible assets.
Taxpayers who do not fall under any of the above mentioned cases are required to document the compliance with the arm's length principle according to the financial-accounting and tax regulations in force. Thus, even though they are not required to draft a Transfer Pricing File containing the mandatory information required by the law, they still need to prepare a documentation for the transactions carried out with their related parties.
For any questions regarding the information included in this leaflet, please feel free to contact us and one of our team members will contact you shortly.
Any presented information is general and is not meant to address the specific conditions of a particular individual or legal person. Although we try to provide accurate and up-to-date information, there is no warranty that such information is accurate at the time of its receipt or that it continues to be accurate. No action should be taken based on this information without relevant professional assistance following a careful examination of the circumstances that are typical of a particular state of affairs.
