The diary of a controversial legislative package-an overview of some of the radical measures adopted to overcome the budget-fiscal crisis
(I) the limited tax deductibility of the expenses related to the intra-group services provided by non-residents: what should be understood from the official texts and what to expect the taxpayers.
It has already been written a lot about the legislative packages of autumn, and waiting for the decision of the Constitutional Court of October 8, 2025 on those for which there was no ruling on September 24, 2025, the echoes seem to be attenuated. However, as the details matter -especially in taxation, where the shades can completely change the effects of a regulation -, it seems necessary and useful to use this time for a synthetic analysis of the new expected regulation, after things have settled.
We start by reminding that the practice of the “snowball” in the adoption of the fiscal norms has become recurrent for many years: totally questionable solutions are initially announced to get used to the public with the negative impact, then they are tightened, when the taxpayers reactions can not influence anything. This is what happened with the Government's responsibility for the fiscal and economic changes in the PL-X project no. 246/2025. Thus, although the minimum tax on the turnover (IMCA) seemed to be eliminated, to be replaced by limiting the deductibility of the expenses related to the intragroup services. Finally, not only did not give up any, but, on the contrary, both were kept and will be applied alternately for taxpayers with turnover over 50 million euros, and limiting the deductibility for those under this threshold, except those in art. 15 Fiscal code.
The correction of the legislative projects in the final phase of debate is proven for many years more and more difficult, especially in the procedure of assuming the Government's responsibility, where changes are made directly to the Parliament. From a conceptual perspective, except for punctual adjustments (such as, in particular, the elimination of retroactivity from the original form, which we will analyze in the second part of the journal), many of the last -minute changes have brought more problems.
In the “Journal of a controversial fiscal package” we try to analyze the most problematic legislative provisions from the regulations included in the package of fiscal-budgetary reform, from an exclusively technical perspective, without entering any political, ideological or social controversies.
In this first episode we propose a framework stop on the preconceived limitations of deductibility of intra-group services, quickly reviewing (1) Approaching this theme in practice in fiscal controls and in public discourse (2) which should be understood from the intentions stated regarding this legislative measure; and (3) the controversies that this measure generates; (4) Finally trying to anticipate what the taxpayers should expect.
1) The deductibility of intra-group services-an eternal topic on the agenda of fiscal controls in practice, to the detriment of the complicated transfer pricing analyzes
Before analyzing some of the public justifications of the legislative measure (detailed in point 2 below), it is interesting to present the approach to the fiscal control bodies in this area so far. Technically speaking, the denial of fiscal deductibility was possible either by the effect of considering the legal requirements of deduction, or by those of transfer prices, both generating the modification of the tax base and, implicitly, the profit tax. In practice, on the other hand, while the transfer pricing analyzes were (more) rare in the tax controls for various reasons (lack of specialized resources/specific databases, etc.), the actual denial of the deductibility of these expenses was the “standard” approach in the tax controls.
Thus, the multinational companies that organize their intragroup service centers for economic efficiency reasons – a practice recognized by the OECD and the EU – have been most often treated with suspicion. At the same time, the public discourse has often maintained and perpetuated the idea that these services are a means of outsourcing profits, ignoring even the fact that the providers are often in jurisdictions with higher taxation than Romania. This perception has fueled, over the years, various legislative initiatives meant to limit or even suppress the deductibility of these expenses-a tendency in which the fiscal package analyzed here. However, what is not taken into account is that, if in the past such practices were associated with opaque structures from tax havens, for over a decade the legislative reality has changed radically, with the international reforms coordinated by the OECD.
2) Capping of the fiscal deductibility of the expenses with the intragroup services provided by non -residents in correlation with the analysis of the transfer prices – what we should understand from the public statements and the legislative texts
Analyzing without entering the technical details limiting the deductibility of the expenses with the intra-group services, as described in the new art. 251 From the Fiscal Code, it is clear that the legal norm requires a predetermined framework. Thus, the fiscal deductibility unreal with the concrete economy is capable, even if some exceptions have been provided, which involves taxpayers' efforts to adjust to the new equal standards, especially given that their business plans were based on the technical support of the group companies.
We should also highlight the confusion that is very likely to have appeared in society from some public statements, according to which the above-given legislative extent would be adopted in relation to the issue of transfer prices related to intra-group services. In fact, the ceiling of deductibility in 1% of the taxpayer's expenses (according to the legal mechanism, in whose details we do not enter here) has nothing to do with the principle of market value. On the contrary, the latter represents a distinct aspect, which must be established by reference to the specific rules of comparability, provided by the international regulations adopted by Romania, and it cannot be instituted by the method of esteatist conducting in the new fiscal norm.
In contrast, in its essence, the measure even flagrantly contradicts the economic principles envisaged by the OECD, which promotes rigorous economic analysis, and not the imposition of administrative ceilings of deductibility or forced adjustments of the taxpayers' activity to benefit from the absolutely necessary services in the natural and common performance of this activity. Therefore, the question is naturally asked how such legal regulations can be adopted, although Romania makes OECD alignment efforts, given that it represents a strategic objective proclaimed by the decision makers from us.
The true motivation of our legislator should be sought in the exposition of reasons for the expected regulation, being practically by the practical problems mentioned to be encountered by the Romanian state in the proper verification of the rules of deductibility and transfer prices. And, in the same way, of course, from the legal text that exceeds – absolutely naturally, in relation to the significance of using this mechanism – starting with 2027 the application of this ceiling of deductibility to companies that have obtained an advance price agreement (water). It is observed that this is a mechanical solution, without any connection with the economic reality, much easier and efficient to be applied by the fiscal bodies, without consuming time and energies in order to verify within the usual activities, ignoring, instead, the extremely negative impact on the taxpayers.
3) Economic conductism in the Intgroup services and differentiated treatment depending on the location of the affiliate that provides them – the new reality in Romania?
No doubt the state is entitled to set the tax rules and fight taxpayers abuse (including when they violate transfer prices or not fulfill of plan the requirements of fiscal deductibility), as often stated in the public statements of the officials. Instead, it is also obvious that it has neither the mission nor the justification to impose business models through tax constraints. Economic freedom, guaranteed by the Constitution, implies indeniably that economic agents can freely choose how they organize their activity, as long as they respect the rules of the above-mentioned game.
As the same does not seem to be natural the differentiated deduction of the expenses in the services provided by the affiliates, according to the national or foreign jurisdiction in which the latter are established, as long as in the reference analysis of the comparability of the essential legal treatment, the need covered by the services in question must be, and the location does not take place. Moreover, this limitation can also discuss the European rules, for example, to freedom to provide services in the Union space.
4) and finally, a challenge: Is it limiting the fiscal deductibility analyzed above the worst perspective to consider in practice?
Under the pretext of strengthening the fiscal system, the new article 25¹ of the Fiscal Code fragile the economic system of Romania, by this measure of administrative limitation of the fiscal deductibility of the expenses related to the intra-group services, contrary to the purpose it proposes to support, the respect of the transfer prices applicable within the free market.
Although worldwide and European level, the anti-abuse legislative measures are also recognized, and it is desirable to adopt them, in order to ensure a competitive and honest economic environment, this legal provision does not fall into the pattern considered by these foreign or international trends and norms to which, in fact, referred to the public statements. It is therefore necessary to re -analyze the legislative change, especially in the context of the discussions regarding the demands of the OECD and the standards of avoiding double taxes promoted and supported by this organization, including in the context of the recent legislative measures envisaged to promote mutual agreement (MAP) dedicated by the international documents adopted.
And, of course, who imagines that at least in this way the eternal differences and disputes on tax deductibility have ended, so that (at least) benefit from the maximum legislative ceiling, it may have great surprises. This, as it is at least difficult to imagine, if not impossible, how a path so well beaten by the tax authorities is abandoned in practice. So it remains to be seen if these taxpayers will not completely give up this type of expenses or, on the contrary, if they will not challenge the new legal norms in front of the competent forums of national, European or international order.
Article supported by PWC Romania
