The government is going to introduce an additional tax of 15% for multinational companies. Two taxes are actually introduced: “additional” and “statewide additional”. It’s about getting to know each other a revolution in the field of taxation after the agreement concluded with the OECD. In this sense, the European directive (2022/2523) is practically transposed.

Bill on international taxation at the rate of 15% – click to open

This tax represents the difference between the minimum rate of 15% and the effective tax rate determined at the level of branches in Romania of multinational companies located abroad, which will be paid in Romania. Thus, Romania will be entitled to collect the tax difference that was not collected in the jurisdictions of the parent companies of the multinational groups.

According to the bill prepared by the Ministry of Finance, this additional national tax (as the authorities call it) will apply to multinationals and large national groups of enterprises that reach an annual threshold of consolidated income of at least 750 million euros.

Excluded are government institutions, international organizations, pension funds, non-governmental organizations, investment funds that are ultimate parent companies and real estate investment vehicles, as well as other entities 95% owned by them that operate exclusively or almost exclusively for the purpose of holding assets or investing in funds for the benefit of these entities or that carry out exclusively auxiliary activities to that carried out by the said entity or entities.

The company’s net income or net accounting loss will be adjusted for net tax expense, excluding dividends, excluding capital gains or losses, including revaluation gains or losses, gains or losses on disposal of excluded assets and liabilities, foreign exchange gains or losses , non-deductible expenses, prior period errors and changes in accounting principles and employee pension costs.

Profit from international transportation is exempt from the tax base.

The effective tax rate of a group of large multinational companies must be compared with the minimum tax rate of 15% to determine whether the group should pay additional tax by applying the IIR (Income Inclusion Rules) and UTPR (Under-Taxed Profits Rules).

Therefore, if the effective tax rate is lower than the minimum rate in a particular jurisdiction, the tax must be allocated among the entities in the MNC group that are liable to pay that tax in order to meet the 15% rate.

If the share is less than the minimum, the parent company of the group must apply the income inclusion rules (IRR) to its low-tax entities to ensure that such group is liable to pay tax at the minimum effective tax rate of 15%.

The law provides for a de minimis exemption for groups of multinational companies or groups that have an average revenue of less than €10 million and an average qualified profit or loss of less than €1 million in the jurisdiction.

Such groups will not have to pay additional tax even if the effective tax rate is lower than the minimum tax in that jurisdiction.

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