Romania's tax authority, the Agenția Națională de Administrare Fiscală (National Agency for Fiscal Administration, "ANAF"), has introduced expanded reporting obligations that take effect from 1 January 2026. Foreign entities with economic ties to Romania – whether through subsidiaries, branches, service contracts, or cross-border payments – face new disclosure duties that carry meaningful penalties for non-compliance.
Romania's updated tax legislation imposes enhanced reporting requirements on foreign entities that generate income from Romanian sources or maintain a sediu permanent (permanent establishment) in Romania. Affected entities must submit revised declarations covering corporate income tax positions, withholding tax on outbound payments, and transfer pricing documentation by 31 March 2026 for the preceding fiscal year. Entities that fail to file by this deadline face administrative fines and potential reclassification of their Romanian tax residency status.
This alert summarises what changed, which business categories are affected, and the five immediate steps that international companies should take before the compliance deadline.
What changed and when it takes effect
Romania's tax legislation was amended to align domestic reporting rules with EU DAC6 and DAC7 standards and OECD Pillar Two transparency expectations. The changes affect three distinct reporting regimes.
First, the corporate income tax declaration now requires a granular breakdown of income sourced in Romania, including passive income streams that were previously reported only in aggregate. Second, the withholding tax regime for cross-border payments – dividends, royalties, interest, and service fees – now requires a transaction-by-transaction disclosure rather than an annual summary. Third, entities relying on tax treaty protection to reduce or eliminate Romanian withholding tax must submit a formal substantiation file at the time of each payment, not retrospectively at year-end.
The effective date for all three changes is 1 January 2026. The first reporting period subject to the new rules is the fiscal year ending 31 December 2025. Declarations are due by 31 March 2026. Entities with non-calendar fiscal years must apply the new rules from the first fiscal year that begins on or after 1 January 2026.
For transfer pricing, Romania has also tightened the documentation threshold. Entities whose intra-group transactions with Romanian counterparties exceed a defined monetary threshold during the year must prepare a local file and submit it on demand within 30 days of an ANAF request. The previous 45-day response window has been shortened.
Which foreign entities are affected
The new rules apply to a broad set of foreign entities. Affected categories include the following:
- Non-resident companies with a permanent establishment in Romania – including construction sites, service arrangements, and dependent agent structures that meet the permanent establishment threshold under Romanian tax legislation or a relevant tax treaty.
- Foreign entities receiving Romanian-source income subject to withholding tax – this covers dividends paid by Romanian subsidiaries, royalties for intellectual property used in Romania, interest on loans to Romanian borrowers, and management or technical service fees.
- Foreign parent companies of Romanian subsidiaries engaged in intra-group transactions above the transfer pricing documentation threshold.
- Non-resident entities that have claimed tax residency exemptions or tax treaty reductions on Romanian income in prior years and have not updated their beneficial ownership or substance documentation.
Entities that previously relied on informal or summary reporting practices are at the greatest risk. ANAF has signalled that it will cross-reference the new declarations against banking data and corporate registry filings. Discrepancies will trigger audit selection.
A foreign entity that believes its Romanian activities fall below the permanent establishment threshold should reassess that position under the updated rules. Romania has adopted a broader reading of the dependent agent concept, bringing certain commissionnaire and distribution arrangements within scope. Engaging a tax lawyer in Romania to review the current structure before the deadline is the most effective risk-mitigation step available.
To receive an expert assessment of your Romanian tax reporting position, contact us at info@ferrazwhitmore.com.
Immediate actions for international companies
International companies with Romanian exposure should address the following five items before 31 March 2026.
1. Audit permanent establishment exposure. Review all Romanian activities – including digital services, construction, and agency arrangements – against the updated permanent establishment rules. Document the factual basis for any conclusion that no permanent establishment exists. If the analysis is borderline, obtain a written legal opinion before the filing deadline.
2. Prepare transaction-level withholding tax records. Compile a payment-by-payment register of all Romanian-source income paid or received during 2025. Each entry should record the payment date, gross amount, applicable tax treaty provision, and withholding rate applied. This register forms the basis of the new declaration and supports any treaty benefit claim.
3. Update tax residency certificates. Tax treaty protection requires a valid certificate of tax residency issued by the home-jurisdiction authority. Certificates must cover the relevant payment period. Expired or missing certificates will disqualify treaty-reduced withholding tax rates and expose the payer to full statutory withholding tax liability, plus penalties.
4. Review transfer pricing documentation. Entities above the intra-group transaction threshold must have a local file ready for submission within 30 days of an ANAF request. If the file has not been prepared or updated for the 2025 fiscal year, preparation should begin immediately. Retroactive preparation under audit pressure is significantly more costly and less effective.
5. Assess corporate income tax positions in Romania. Foreign entities with a permanent establishment must file a corporate income tax return covering Romanian-source profits. The new rules require a more detailed breakdown of attributable income. Entities that have not previously filed should assess whether past activities gave rise to an undisclosed permanent establishment – and consider whether a voluntary disclosure is appropriate.
Entities with corporate law questions related to the Romanian subsidiary structure can find additional context in our analysis of corporate legal matters in Romania. For a comparative perspective, our alert on tax reporting changes in Portugal addresses similar DAC-driven reforms in a parallel EU jurisdiction.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our tax law practice supports foreign entities navigating Romania's corporate income tax and withholding tax regimes, transfer pricing obligations, and tax treaty compliance requirements. The firm combines Portuguese civil law expertise with English common law tradition, giving international clients a single point of contact for cross-border tax structuring and regulatory compliance in EU and non-EU markets. As a law firm in Romania and across Europe, we work with international entrepreneurs, institutional investors, and in-house legal teams who require practical, results-oriented counsel. Our attorneys have advised on inbound investment structures, permanent establishment assessments, and withholding tax disputes across both civil law and common law systems. To discuss your Romanian tax reporting obligations, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.