“A Volume SRL” challenged an assessment of additional corporate income tax following a transfer pricing adjustment made by the tax authorities for FY 2012-2017.
In a rulings of 30 June 2021 and 14 February 2024, the Bucharest Court of Appeal annulled the assessment for 2012 as time barred and ordered a refund, but largely upheld the tax authority’s position on transfer pricing for the remaining FY 2013-2017.
“A Volume SRL” appealed to the Supreme Administrative Court and the tax authorities filed a cross appeal.
In the appeal “A Volume SRL” argued that the Court of Appeal did not give proper reasons and created contradictions in its handling of the court ordered expert report. It said the lower court copied the tax authority’s position without an independent analysis and ignored procedural complaints including inspection duration and limits on the right of defense.
Judgment
The Supreme Administrative Court admitted “A Volume SRL”’s appeal, quashed the Court of Appeal’s decision and judgment, and remanded for a fresh review limited to transfer pricing. The appeals by the tax authorities were rejected as unfounded, while the remainder of the Court of Appeal’s decision was maintained.
The Court held that the judgment failed to meet the statutory duty to give reasons. The Court of Appeal had reproduced the tax authority’s reasoning and rejected the expert’s answers without justification.
Excerpt in English
“For the reasons set out above, pursuant to Article 496 of the Code of Civil Procedure, the High Court will admit the appeal lodged by the plaintiff A S.R.L. against the decision of June 30, 2021, and civil judgment no. 235 of February 14, 2024, and will quash the contested decision and judgment and refer the case back for retrial with regard to the re-examination of transfer prices.
The rest of the provisions of the contested decision and judgment will be upheld.
The appeals lodged by the National Agency for Fiscal Administration (subrogated to the rights and obligations of the General Directorate for the Administration of Large Taxpayers) and A.N.A.F. – General Directorate for the Settlement of Appeals against civil judgment no. 235 of February 14, 2024, will be dismissed as unfounded.”