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Cross-Border Transfers of Assets and ANAF Scrutiny: What Foreign Owners Should Expect

This article looks at how ANAF examines cross-border transfers of cash, shares and IP involving Romanian entities, from substance tests to transfer pricing and anti-abuse rules. It highlights typical audit questions, documentation expected by ANAF and practical ways for foreign groups to structure and defend their cross-border flows.

Moving cash, shares or intellectual property across borders is now a normal part of running a regional or global business. If Romania sits anywhere in your structure — as an operating company, holding company, IP owner or simply as a cash hub — the National Agency for Fiscal Administration (ANAF) will inevitably look at these flows sooner or later.In recent years, ANAF has intensified audits focused on cross-border transactions, aligning domestic practice with the OECD Transfer Pricing Guidelines 2022 and the EU anti-avoidance framework. At the same time, the Romanian Fiscal Code has been updated with a robust general anti-abuse rule (GAAR) in Article 11 and increasingly detailed rules on withholding tax and transfer pricing. For foreign owners, this translates into more questions, more documentation requests and a higher risk that ANAF will re-characterize transactions they consider artificial.This guide is written for foreign and Romanian business owners, CFOs and in-house counsel who manage group flows into or out of Romania. It focuses on:
  • typical transactions that attract ANAF scrutiny and trigger audits;
  • the interaction between transfer pricing rules and substance requirements;
  • withholding tax on payments from Romania to non-residents;
  • how to prepare documentation and defend against re-characterization.

The discussion is based on the Romanian Fiscal Code (Law no. 227/2015, as further amended), its implementing norms, ANAF guidance on transfer pricing and international standards such as the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022.

Typical Transactions That Trigger Audits

ANAF uses risk-based selection for audits, combining industry data, cross-checks from counterparties, EU and OECD information exchange and internal benchmarks. In practice, certain cross-border transactions involving Romanian entities appear again and again in audit files.

1. Intercompany service and management charges

In almost every multinational group, Romanian entities either pay or receive service fees from related parties: head-office management charges, regional coordination fees, IT and software support, shared services, marketing, logistics, procurement, R&D contributions and so on.

The Fiscal Code allows tax authorities to adjust the tax result if the price of related-party transactions deviates from market value, and expressly permits re-characterization of transactions to reflect their economic substance.[Fiscal Code] In intercompany service arrangements ANAF typically questions:

  • benefit test — did the Romanian entity actually receive a demonstrable benefit from the services, or is it simply paying a head-office overhead allocation?
  • duplication — are the same activities already performed locally (for example, where Romania has its own finance, HR or marketing teams)?
  • shareholder vs. operational services — are some costs related to the shareholder’s own interests (e.g. group reporting, investor relations), which should not be charged to the subsidiary?
  • mark-up level — does the mark-up applied by the service provider fall within an arm’s-length range backed by a benchmarking study?

Where ANAF concludes that the services were not actually rendered or are insufficiently documented, they often deny the deduction and may impose withholding tax if the foreign recipient is considered to have been remunerated for Romanian-source services.

2. Royalty payments and IP transfers

Transfers and licensing of intellectual property (IP) — trademarks, software, technology, know-how, patents — are another core focus area. In Romania, royalties paid to non-residents are generally subject to 16% withholding tax, unless reduced by a double tax treaty or exempt under the EU Interest and Royalties Directive implemented in the Fiscal Code.[Title VI — Non-resident income tax]

ANAF also scrutinises the transfer pricing and DEMPE (development, enhancement, maintenance, protection and exploitation) profile of IP-related flows, in line with the OECD Transfer Pricing Guidelines. The Romanian entity paying royalties is expected to have a clear business rationale and to demonstrate that:

  • the group entity owning the IP actually performs or controls DEMPE functions and bears associated risks;
  • the IP is genuinely used in the Romanian business and creates measurable value;
  • the royalty rate falls within an arm’s-length range supported by comparable agreements or database studies.

IP migrations — for example, moving software or trademarks out of Romania into a low-tax jurisdiction or a regional hub — raise additional questions. ANAF may seek to tax hidden gains on IP transfers or re-characterize an apparent cost-sharing arrangement as a sale of intangibles, especially where significant value has been built in Romania (local development teams, marketing investment, customer base).

3. Cross-border loans and cash-pooling

Financing transactions have been under close ANAF scrutiny for several years, particularly after the OECD issued the 2020 transfer pricing guidance on financial transactions, now incorporated in the 2022 Guidelines.[OECD TP Guidelines]

Typical areas of challenge include:

  • interest rates on intra-group loans (too high for borrowers or too low for lenders compared to market conditions);
  • thin capitalization / interest limitation rules and whether the Romanian entity has sufficient equity for its functions and risks;
  • guarantees and cash-pooling arrangements where the Romanian entity may be providing free financial support to the group;
  • re-characterization of loans as equity contributions (or vice versa) where the contractual form does not match economic reality.

ANAF expects taxpayers to support intercompany financing with functional analysis, credit rating assessments, comparables (loan databases and bond yields) and clear documentation of group treasury policies.

4. Dividends, shareholder exits and reorganizations

From 1 January 2025, Romania applies a 10% withholding tax on dividends paid to both resident and non-resident shareholders, unless reduced or eliminated under participation exemption rules or tax treaties.[KPMG — Dividend WHT] ANAF pays particular attention to situations where:

  • large dividends are distributed shortly before the sale of a Romanian company;
  • cross-border mergers or spin-offs shift assets or accumulated profits out of Romania;
  • shareholder loans are repaid or capital is reduced immediately before an exit.

Article 11 of the Fiscal Code allows tax authorities to disregard transactions lacking economic purpose and to re-characterize them according to their economic substance.[Fiscal Code — Article 11] In the context of shareholder exits, ANAF may argue that part of the proceeds labelled as capital gains should actually be treated as disguised dividends, or that a series of steps (for example: capital increase, transfer of assets, dividend distribution, share sale) form a single artificial arrangement whose main purpose is to reduce Romanian taxation.

5. Business restructurings and IP or function migrations

Groups increasingly centralise functions such as procurement, logistics, marketing or R&D in regional hubs. When this affects a Romanian entity — for instance, converting a full-fledged distributor into a limited-risk distributor, or moving R&D activities to another country — ANAF looks closely at whether the Romanian company has transferred profit-generating functions or intangibles without adequate compensation.

Following OECD BEPS Action 8–10, the transfer of functions, assets and risks can itself be a controlled transaction requiring arm’s-length remuneration. ANAF may challenge structures where the Romanian entity’s margins collapse after a restructuring while the group as a whole remains highly profitable.

Transfer Pricing and Substance Requirements

Romania formally aligns its transfer pricing rules with the arm’s-length principle as articulated in the OECD Guidelines. The Fiscal Code and the Tax Procedure Code empower ANAF to adjust taxable profits where related-party prices deviate from market values, and to disregard or re-characterize transactions lacking economic substance.[Law 227/2015] ANAF has also issued detailed guidance on transfer pricing documentation for large, medium and small taxpayers.[ANAF Transfer Pricing Guidance]

1. Arm’s-length principle and Article 11 GAAR

Two pillars shape ANAF’s approach:

  • Arm’s-length pricing — Related-party transactions must be priced as if they were concluded between independent parties in comparable circumstances. This is explicitly required by the Fiscal Code and detailed in transfer pricing guidance and in Order no. 442 on the content of the transfer pricing file.[Order 442/2016]
  • Substance-over-form — Article 11 of the Fiscal Code authorizes tax authorities to disregard transactions that lack economic purpose or to re-characterize them based on their real economic substance, particularly where the essential purpose is to obtain a tax advantage.[Article 11 commentary]

For cross-border transfers of assets, ANAF will typically start by asking: is the price arm’s length, and does the structure have real business substance? If the answer to either question is negative, adjustments or re-characterization are likely.

2. Transfer pricing documentation obligations

Romanian rules distinguish between large taxpayers and small or medium taxpayers. In line with ANAF guidance and recent practice:

  • large taxpayers must prepare an annual transfer pricing file and be able to present it quickly upon request (short deadlines, often 10 days) for material related-party transactions;[ANAF TP Guide]
  • medium and small taxpayers may be required to prepare a file upon request if their related-party transactions exceed certain thresholds;
  • the documentation must usually contain a group / master file section and a local file, consistent with OECD BEPS Action 13 and EU guidance.[ANAF TP Guidance]

Typical content includes:

  • group structure and business description;
  • detailed description of the Romanian entity’s functions, assets and risks (FAR analysis);
  • description of each controlled transaction (services, sales, financing, IP, business restructurings);
  • selection and application of the most appropriate transfer pricing method;
  • benchmarking studies based on external databases;
  • financial information showing how the applied prices translate into margins.

Failure to provide adequate documentation can lead to fines and to ANAF applying their own adjustments based on internal benchmarks or external data.

3. Substance: people, risks and decision-making

Substance has become a central theme in audits. Drawing on the OECD Guidelines and BEPS outcomes, ANAF increasingly checks whether the entity receiving profits or assets actually has the people and decision-making capacity to justify them. Key questions include:

  • Where are strategic decisions taken? Are board minutes, business plans and key contracts aligned with the location of management?
  • Who controls economically significant risks — for example, market risk, credit risk, product liability, IP development risk?
  • Does the entity owning IP or shares of Romanian companies have sufficient employees and competence to exploit and protect those assets?
  • Are support functions (accounting, HR, legal) consistent with the claimed level of substance, or is the entity effectively a letterbox?

For foreign owners moving assets out of Romania into entities with limited substance, Article 11 GAAR is a real risk. ANAF may argue that the new holding or IP company is purely artificial, deny treaty benefits and tax the transaction as if the profits had remained in Romania.

4. Economic substance and artificial transactions

Article 11 defines artificial transactions as those lacking economic content and which would not normally be used in ordinary business practice, where the essential purpose is to avoid tax or obtain advantages that would not otherwise be granted. Cross-border transactions qualified as artificial fall outside the scope of double tax treaties and may be re-taxed under domestic rules.

In practice, ANAF relies on this provision to attack:

  • chains of intra-group transfers with little or no business rationale;
  • holding structures in zero-tax or low-substance jurisdictions where the only role is to intercept dividends or capital gains from Romania;
  • round-tripping structures where Romanian investors route investments through foreign entities only to re-invest in Romania under treaty benefits;
  • IP migrations where valuable intangibles developed in Romania are transferred to a low-tax IP company without commensurate compensation.

Foreign owners should therefore treat substance not as a formal requirement, but as a strategic design question: where are the real people, systems and risks that produce value, and is the tax structure aligned with that reality?

Withholding Tax on Payments to Non-Residents

Romania applies withholding tax (WHT) on certain categories of income paid to non-residents, under Title VI of the Fiscal Code. The payer of income (typically the Romanian company) is responsible for calculating, withholding, declaring and paying the tax.[Title VI overview] For cross-border transfers of funds, shares or IP, understanding WHT exposure is crucial.

1. Main categories of Romanian-source income

Under Articles 223 and 224 of the Fiscal Code, Romanian-source income subject to WHT for non-residents includes, among others:

  • dividends distributed by Romanian companies;
  • interest and royalties;
  • fees for management and consultancy services, regardless of where they are rendered;
  • commission income, rental income and income from sports or entertainment activities performed in Romania;
  • capital gains from the sale of shares in Romanian companies, in certain cases.

As from 2025, the standard WHT rate on dividends paid to non-residents is 10%, up from 8% in prior years, while most other categories (interest, royalties, management and consultancy fees) are subject to a 16% rate, subject to exemptions and treaty reductions.[PwC Romania — WHT][2025 tax changes]

There is also a 50% WHT rate that can apply to payments (interest, royalties, services and other payments) made to entities resident in jurisdictions that do not have an information exchange agreement with Romania, where the payments result from artificial transactions. This rule is squarely linked to the GAAR and substance analysis.

2. EU directives and participation exemptions

As an EU Member State, Romania implements the Parent-Subsidiary Directive and the Interest and Royalties Directive. In broad terms and subject to specific conditions:

  • dividends paid by a Romanian company to an associated EU or EEA company may be exempt from WHT if the recipient has held at least 10% of the shares for an uninterrupted period of at least one year;
  • interest and royalties paid to an associated EU company may also be exempt where the participation and holding period conditions are met (typically 25% for at least two years).

These exemptions generally require that the foreign recipient is the beneficial owner of the income and that the arrangement is not abusive. ANAF will test substance and may deny the exemption where a conduit entity has no real economic activity.

3. Double tax treaties and practical issues

Romania has concluded a broad network of double tax treaties (DTTs) which may reduce WHT rates on dividends, interest, royalties and other income. To benefit from treaty relief:

  • the foreign recipient must be resident in the treaty partner state under its domestic law;
  • valid tax residence certificates and, in some cases, beneficial ownership statements must be obtained and kept on file;
  • the Romanian payer must apply reduced rates at source or the recipient must seek a refund where domestic WHT was initially applied at the standard rate.

ANAF has become stricter in accepting treaty claims, particularly in structures involving holding companies in jurisdictions with extensive treaty networks. Insufficient substance, lack of personnel or office space, or the immediate onward payment of income can lead ANAF to argue that the intermediary is not the beneficial owner and to deny treaty benefits.

4. Withholding tax and cross-border asset transfers

When foreign owners move shares or IP out of Romania, WHT issues may arise in several ways:

  • Dividends before exit — Distributing profits before selling shares typically triggers dividend WHT (unless exempt), while selling shares may or may not be subject to capital gains taxation, depending on the treaty and local rules.
  • Buybacks, capital reductions and liquidations — Amounts paid to non-resident shareholders in these situations may be treated wholly or partly as dividends, attracting WHT.
  • IP transfers — A sale of IP by a Romanian entity to a non-resident may lead to taxable gains in Romania at the corporate level, while subsequent royalty flows are then subject to WHT when paid to the new foreign IP owner.

Tax modelling should therefore include both corporate income tax and WHT impacts, combined with substance and GAAR analysis, before any cross-border restructuring is implemented.

How to Prepare Documentation and Defend Against Re-characterization

Foreign owners cannot eliminate ANAF scrutiny, but they can significantly improve their position in an audit by planning in advance and preparing robust documentation. Four pillars are particularly important: transfer pricing, legal documentation, substance evidence and narrative coherence.

1. Build a robust transfer pricing file around your flows

For any group with material cross-border flows involving Romania, a well-prepared transfer pricing file is the first line of defence.

Key recommendations include:

  • Map all controlled transactions involving the Romanian entity: services, royalties, loans, guarantees, cost-sharing, asset transfers, business restructurings and cash-pooling.
  • Perform a detailed functional analysis for each entity in the chain — who does what, using which assets, and bearing which risks. In restructurings or IP transfers, clearly describe how functions and risks migrate.
  • Select appropriate methods and support them with external benchmarks (databases for comparables, royalty agreements, loan databases). Ensure the benchmarking is refreshed periodically.
  • Document contributions over time: for example, when Romanian teams develop software or build brand value, reflect that in the analysis and ensure any transfer of IP out of Romania recognizes this value.

ANAF guidance on transfer pricing documentation provides a structure for the file that is broadly aligned with OECD recommendations (master file and local file). Using that structure and language makes it easier for inspectors to navigate your documentation and reduces the risk of misunderstandings.

2. Put legal agreements and corporate approvals in order

Substance is not only about people, but also about the formal framework within which they operate. ANAF often asks for:

  • intercompany service agreements, IP licenses and cost-sharing agreements, signed and dated;
  • loan agreements, guarantee agreements and group treasury policies;
  • share purchase agreements (SPAs), contribution agreements and merger documentation for asset and share transfers;
  • board resolutions, shareholder decisions and minutes documenting why certain restructurings or transfers were undertaken.

In many audits, the absence of clear contracts forces taxpayers into a defensive position where ANAF fills the gaps with its own narrative. Investing time upfront to align legal documentation with the actual conduct of the parties is one of the most cost-effective protections you can put in place.

3. Evidence of substance: show the real business

To defend against GAAR-based re-characterization, you need to show that your structure reflects real business substance. Practical sources of evidence include:

  • employment contracts, job descriptions and organisational charts for staff in the relevant entities;
  • office leases, IT infrastructure and local service contracts (demonstrating physical presence);
  • travel logs, meeting minutes and correspondence showing where key decisions are made;
  • risk management and compliance documents clarifying who bears which risks.

For IP holding companies, in particular, it is important to demonstrate involvement in the DEMPE functions — not necessarily performing every activity directly, but at least controlling and financing them. For holding companies owning Romanian subsidiaries, substance means more than simply collecting dividends: it implies some role in strategy, financing or group management consistent with their profit share.

4. Narrative coherence: make the business story clear

ANAF auditors are more likely to trust structures whose story is internally coherent. When explaining a cross-border asset transfer or restructuring, ask yourself:

  • Does the timing make commercial sense, or does it closely track changes in tax law?
  • Is there a clear business rationale (access to markets, consolidation of IP, regulatory or financing needs) that you can explain without referencing tax?
  • Do the financial outcomes (margins, capital gains, WHT exposure) look reasonable in light of that rationale?

Where multiple steps are involved — for example, incorporating a new holding company, transferring shares, injecting capital, moving IP and then selling a stake to a third party — it is useful to prepare an internal memo or board paper that explains the overall strategy in one place. This document often becomes central evidence in an audit.

5. Prepare for controversy: simulations, APA and dispute resolution

Given the inherent judgment involved in transfer pricing and GAAR issues, disputes with ANAF may still arise even when you have robust documentation. Foreign owners should consider:

  • Pre-implementation simulations of tax outcomes under different scenarios, including ANAF’s potential adjustments, to test the resilience of the structure.
  • Advance Pricing Agreements (APAs) for large and recurring transactions, especially in complex financing or IP structures. Romania has an APA framework, and an APA can significantly reduce uncertainty for long-term arrangements.
  • Mutual agreement procedures (MAP) under applicable tax treaties, where double taxation arises from ANAF and a foreign tax authority taking inconsistent positions.

In all these contexts, contemporaneous documentation of the commercial rationale and arm’s-length pricing is invaluable.

Putting It All Together: A Practical Roadmap for Foreign Owners

If you are planning to move cash, shares or IP into or out of Romania, or if ANAF has already raised questions about your cross-border flows, the following roadmap can help structure your response:

  1. Inventory your cross-border transactions with Romanian entities, including both current flows and planned restructurings.
  2. Identify high-risk areas from ANAF’s perspective: large one-off transfers, IP migrations, holding structures in low-substance jurisdictions, management fees with limited local benefit, thinly capitalised entities.
  3. Review your transfer pricing policies and documentation, aligning them with the latest OECD Guidelines and ANAF guidance, and ensuring local files are current and responsive to typical audit questions.
  4. Strengthen substance in key entities by aligning people, functions and risks with the structure and making sure this is visible in contracts, minutes and day-to-day operations.
  5. Model WHT and GAAR outcomes for critical flows, including treaty and EU directive relief, but also testing adverse scenarios where relief is denied due to lack of beneficial ownership or substance.
  6. Consider advance tools such as APAs or pre-rulings for especially contentious or high-value transactions.
  7. Prepare an audit-ready pack for each major transaction: contracts, board decisions, valuations, benchmark studies, tax opinions and internal memos explaining the business rationale.

Cross-border transfers of assets can be structured efficiently and legitimately. The key is to acknowledge that ANAF will look beyond the headline tax rate and ask how the transaction fits into the real business. If your documentation and substance answer that question convincingly, audits become a manageable part of doing business, rather than an existential threat.

Sources and further reading

 

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