Changes and additions to the accounting regulations: OMF no. 1,730/2023

The takeaway 

Order of the Minister of Finance (OMF) no. 1,730/2023 introduced changes and additions to the accounting regulations relating to: (i) the exemption from the publication of the profit tax report for medium and large subsidiaries controlled by an ultimate parent company subject to the legislation of an EU Member State and (ii) the first period of reporting, considering various scenarios regarding the financial year of the group and/or branch.

In detail

We present below the main changes and additions brought by OMF no. 1.730/2023 to the accounting regulations regarding individual annual financial statements and consolidated annual financial statements, as approved by OMFP (order of the Minister of Public Finance) no. 1,802/2014 and the accounting regulations in accordance with the International Financial Reporting Standards approved by OMFP no. 2.844/2016:

• The indicator that generates the obligation to draw up the report on the information related to the profit tax has been changed. The analysis will now consider consolidated revenues and not consolidated net turnover as stated in the previous provision. Through this change, the requirements are aligned with those regarding the preparation of the report for each individual country.

• Medium and large subsidiaries that are subject to the legislation of an EU Member State are exempt from publishing the report on the information related to profit tax.

• A provision is introduced with the wording “in the case of a group whose final parent company is from a third country, the obligation to publish the report on the profit tax can be fulfilled by any affiliated entity within the group”, under certain conditions.

• The provisions regarding the content of the profit tax report have been completed as follows:

  • To avoid the accumulated earnings being reported more than once, the amount for an entity that has opened a branch should be attributed to the tax jurisdiction in which that entity is domiciled, regardless of whether branches are opened in one or more Member States. That jurisdiction may be in the EU or a third country.

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

  • No information on a particular activity can be simultaneously assigned to more than one tax jurisdiction. When establishing a certain activity, the place where that activity is conducted is taken into account.

  • When an entity that omitted to present information resumes doing so 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 previously publish information.

The main additions brought by OMF no. 1730/2023 to the accounting regulations applicable to economic operators approved by OMF no. 2.048/2022 include:

• In the case of entities for which the financial year coincides with the calendar year, the first report on the information related to the profit tax is to be published by 31 December 2024 for the financial year 2023. The reporting obligation for entities for the year 2023 applies if the consolidated revenues exceed the amount of RON 3.7 billion, both in the financial year of 2022 and in the financial year of 2023.

• In the case of entities with a financial year corresponding to the period 1 April 2023 to 31 March 2024, the profit tax report is to be published by 31 March 2025. The reporting obligation for entities for the financial year ending on 31 March 2024 applies if the consolidated income exceeds the amount of RON 3.7 billion, both in the financial year ending on 31 March 2023 and that ending on 31 March 2024.

• If a reporting entity has a financial year different from the calendar year, the financial year for the report on profit tax information must correspond to the financial year of the consolidated annual financial statements.

• A reporting subsidiary with a financial year which is different from that of the ultimate parent company is required to report according to that financial year, not its own financial year.

• The deadline for reporting entities to publish the report on profit tax information is within 12 months as of the date to which the consolidated annual financial statements refer.

• In the case of an autonomous entity, the amount of RON 3.7 billion corresponds to its own income.

• Profit tax reports must present information at the level of the European Economic Area states.

• The reporting entities must consider the activities in the states of the European Economic Area (EEA) in the same way as for those in Member States.

• For reporting purposes, entities based in an EEA country are considered to be based in a Member State, i.e. not as being in a third country.

• The format for the reporting is established by the European Commission and adopted pursuant to art. 48c paragraph (4) of Directive 2013/34/EU.

Source: [Order of the Minister of Finance no. 1730/2023 for the regulation of some accounting aspects, published in the Official Gazette no. 559 dated 21 June 2023]