Transition to IFRS accounting vs. local regulations in the context of the global minimum tax: practical implications and impact on financial statements

Companies that are part of multinational groups or large national groups that fall within the scope of the global minimum tax (BEPS 2.0) have the opportunity to switch to the application of IFRS as the basis of accounting starting from 2025.

If, at least for the moment, the transition to IFRS is not opportune, but the company falls under the specific rules regarding the calculation of the national additional tax, then this will have to calculate and present the deferred taxes in the explanatory notes, part of the annual financial statements prepared according to OMFP no. 1802/2014.

Order no. 203/2026, published in the Official Gazette on March 13, 2026, provides the necessary clarifications for the implementation of this option.

Thus, a number of aspects are clarified, including:

When is the transition to IFRS possible?

The transition to IFRS is possible starting with the annual financial statements related to the year 2025, if the entities assess that they have the ability to apply these regulations. Entities that make the transition to IFRS starting from 2025 organize and conduct accounting according to these regulations, starting from the financial year of 2026. The option to switch to the application of IFRS remains valid after January 1, 2026, as long as the entity is within the scope of the global minimum tax.

What happens to entities that switch to IFRS and subsequently fall outside the scope of the global minimum tax?

Entities subject to the global minimum tax and making the transition to IFRS will ensure continuity in the application of these regulations.

In the situation where entities that have made the transition to IFRS no longer fall under the global minimum tax, they can continue to apply IFRS or apply OMFP 1802/2014 starting from the financial year following the one in which they no longer fall under the global minimum tax.

To whom do the deferred tax reporting requirements apply and when do they come into effect?

Entities that fall under the specific rules regarding the calculation of the additional national tax regulated in art. 18 of law no. 431/2023 and which apply the accounting regulations approved by OMFP 1802/2014 have the obligation to present deferred taxes in the notes to the annual financial statements, without recording them in the accounting. This requirement is applicable starting from the financial statements of the year 2025.

What are the advantages and challenges of the transition to IFRS?

The possibility of opting for the application of IFRS is particularly relevant for groups of companies that already apply IFRS accounting rules for consolidation purposes.

Alignment of the accounting rules applied within the group:

• ensures a high level of uniformity at the group level, facilitating a coherent and comparable view on the financial performance of the reporting entities.
• enables the efficiency of reporting processes, by reducing recurring adjustments and reconciliation efforts between different accounting frameworks
• reduces the cost of implementing business processes within the group, eliminating differences in treatment between constituent entities
• reduce the cost of group level auditing
• streamlines the process of ensuring compliance with the requirements of the global minimum tax legislation.

Separately, in the context of increasing transparency requirements and increasingly accentuated integration in international markets, the differences between local accounting regulations and IFRS are becoming more and more relevant for the business environment in Romania.

The IFRS reporting framework is perceived by investors, creditors and commercial partners as a reference reporting framework, in line with international practices, unlike OMFP 1802. In this context, the application of IFRS could lead to an increase in commercial activities, financing and business development carried out by these entities.

OMFP 1802 represents a predominantly prescriptive accounting framework geared towards compliance with local requirements and statutory reporting needs. In contrast, IFRS is based on principles and professional judgment, with the primary objective of providing relevant information to investors, creditors and other informed users of financial statements. This approach allows for a better reflection of the economic substance of transactions, but also comes with a higher level of reporting complexity.

The differences are also reflected in the volume and level of detail of the information presented in the explanatory notes. The explanatory notes prepared under IFRS are much broader and more technical, including detailed descriptions of accounting policies, professional judgments, significant estimates and risks assumed. In the case of OMFP 1802, the presentation requirements are more concise and standardized.

In the area of ​​challenges, it should be mentioned that the transition to IFRS involves initial costs generated by the conversion process, the adaptation of the systems used for accounting and fiscal reporting and the development of skills within the financial teams. Given the short time remaining until the 2025 financial year closing deadline, applying IFRS starting with the 2025 financial statements is challenging for companies that do not have reporting systems ready for this. But the option remains valid for subsequent financial years, for entities within the scope of the global minimum tax.

In conclusion, the transition to IFRS is not only an accounting decision, but a strategic one, with an impact on reporting, internal processes, the external perception of the group and the users of the financial statements.

EY's recommendation for entities that have this option is to carefully analyze the implications from a strategic point of view, weighing the long-term benefits, but also the efforts and costs required.

Article signed by Diana Lupu, Partner, Global Compliance and Reporting, EY Romania and Ana-Maria Nițu, Senior Manager, Global Compliance and Reporting, EY Romania

Article supported by EY Romania