(Official Gazette no. 8 of 5 January 2024) 

• The present law implements the provisions of Council Directive (EU) 2022/2523 of 14th December  2022 which aims to protect the taxing rights of each Member State of the European Union (EU)  on profits generated in their territories by multinational enterprises (MNE) through the implementation of a global minimum corporate tax of 15%. 
• These provisions apply to constituent entities which have their registered office in Romania and  which are members of a group of MNEs or of a large domestic group which has an annual income  of at least the equivalent in RON of EUR 750.000.000 in at least two of the four financial years  immediately preceding the reference financial year. 
• In computing the aforementioned threshold, one should also take into account the income of  entities excluded from the scope of this law, such as: a governmental entity, an international  organization, a non-profit organization, a pension fund, an investment fund that is an ultimate  parent company or a real estate investment vehicle that is an ultimate parent company. 
• The provisions of the law, with certain exceptions, apply in respect of the financial years beginning  from 31 December 2023. The payment and declaration of the top-up tax shall be made no later  than 15 months after the last day of the financial year in question. By exception, for the first year  of application, the declaration and payment of the domestic top-up tax and the submission of the  relevant notifications shall be made no later than 18 months after the last day of the reporting  financial year (2023). 
• The law establishes the following taxation rules: 
  • Domestic Minimum Top-up tax (QDMTT), a tax payable by all constituent entities belonging to  a MNE group or a large domestic group which are taxed at a reduced level in Romania; 
  • Income Inclusion Rule (IIR), in accordance with which an ultimate parent company that is a  Romanian-headquartered constituent entity is liable to pay top-up tax (under the IIR) in  respect of its low-taxed constituent entities that are headquartered in another jurisdiction or  that are stateless. Similar rules apply to intermediary parent companies; 
  • Under-taxed profit rule (UTPR), in accordance with which, in case the ultimate parent  company of a MNE group has its headquarter in a jurisdiction of a third country that does not  apply a qualifyed IIR or in case the ultimate parent company of a MNE group is an excluded  entity, the Romanian-based constituent entities are required to pay top-up tax in the form of  an adjustment equal to the amount of top-up tax allocated under the UTPR to Romanian  constituent entities. 

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For additional details regarding the above, you can contact any member of the Taxhouse team or you can send us an e-mail at office@taxhouse.ro.