Government Ordinance no. 5/2020 establishes the obligation of intermediaries to report the cross-border arrangements

26 February 2020

By the Government Ordinance no. 5/2020 the provisions of Directive 2018/822 regarding the mandatory automatic exchange of information in the tax field regarding the cross-border modalities that are subject to reporting are transposed into the fiscal procedure code.

Thus, according to the provisions of this normative act, intermediaries will be required to report to the tax authorities information on certain cross-border arrangements that could be used to obtain tax advantages, such as the transfer of profits to more favorable tax regimes. In this regard, the cross-border arrangements that are the subject of reporting are those that present an indication of a potential risk of avoiding fiscal obligations. In order to identify the cross-border arrangements subject to reporting, GO no. 5/2020 establishes certain distinctive signs that will be taken into account when establishing the reporting obligation.

Also, the Ordinance contains a definition of the intermediaries to whom the reporting obligation will return. Thus, in this category are found both tax consultants, accounting experts, financial consultants, as well as financial institutions or lawyers. However, intermediaries who can invoke a professional privilege, for example the professional secrecy of which the lawyer is kept, will report the cross-border arrangements only insofar as no confidential information is disclosed from the client’s private sphere. By way of exception, the reporting obligation rests with all those who have designed, organized or managed a reportable cross-border arrangement, as well as those who have provided assistance or advice for this purpose.

The ordinance also stipulates that the model of the form through which the intermediaries will report the cross-border arrangements will be established by an order of the president of the National Agency for Fiscal Administration.

Finally, it should be noted that the provisions of the Directive transposed by this Government Ordinance are to enter into force on July 1, 2020. However, the Community normative act takes effect from June 25, 2018, so that all normative acts fall under this normative act as of June 25, 2018.