Romanian entities, as well as the ones to be incorporated, have the obligation to provide relevant information regarding their ultimate beneficiary by submitting a statement to the Romanian Trade Register (ONRC).
The term “beneficial owner” was brought to the attention of the taxpayers last summer, with the transposition into the Romanian law of two EU Directives regarding anti-money laundering, which together became Law no. 129/2019. The term is defined in the sense of companies for which the Companies’ Law no. 31/1990 is applicable, as the private individual or individuals that have a direct or indirect holding of at least 25% into Romanian legal entities, or in the absence of the above-mentioned participation, manage the legal entity.
The notion was already known from Law no. 656/2002, currently repealed and replaced by Law no. 129/2019. However, the regulatory framework at the time was not comprehensive enough and excluded several types of entities from the scope of the term of beneficial ownership. Therefore, the current legislation expands the scope, clarifying, and supplementing several existing concepts.
Register of Real Beneficiaries – the instrument of the authorities in the fight against tax evasion
An element of novelty is the establishment of the Register of Real Beneficiaries of companies, a register that allows the relevant supervisory and control authorities, as well as reporting entities that apply customer awareness measures, to access accurate and complete information about the real beneficiaries of the legal entities registered in Romania.
„The purpose of establishing such a register is justified by the lack of transparency of the capital structure and, implicitly, of the shareholding structure, which are two essential elements in preventing and combating money laundering, the fight against terrorism and its financing, respectively in the fight against tax evasion.”, mentioned Elena Dima, Tax Consultant, Mazars Romania.
The obligation to provide relevant information regarding the real beneficiary falls with the legal entities registered in Romania at ONRC, as well as those who will be incorporated. The data includes information on the name and surname of the real beneficiary, personal identification data, citizenship, residence, as well as how the control of the legal person is exercised. The reporting is performed based on a statement that must be submitted to ONRC, in order to populate the Register of Real Beneficiaries.
From a compliance perspective, legal entities that are already registered with ONRC have the obligation to submit the declaration on an annual basis, within 15 days of the approval of the annual financial statements, while legal entities that will be incorporated will complete and submit the statement at the time of registration.
An exception to the rule applies for legal entities incorporated before the 21st of July 2019 (the date of entry into force of Law 129/2019), which will submit the first statement by this date.
Whenever changes are found regarding the identification data of the real beneficiary, the legal entity will submit a new statement within 15 days to update the information.
The statement regarding the real beneficiary of the legal person may be given in front of the ONRC representative or may be submitted in authentic form, in person, or through a representative and must be accompanied by an application form and, where appropriate, original power of attorney.
1st of November 2020 is the new deadline for submitting the statement on the real beneficiary
Given the current background of the state of emergency, the submission deadline was extended until the 1st of November 2020.
„An essential aspect is the mandatory character of the statement. To that extent, failure to submit the statement within the legal deadline can be subject to a fine ranging from RON 5,000 to 10,000. Should this occur, the legal entity will receive a new deadline, namely 30 days from the moment the fine is imposed. If the company fails to comply with this second deadline, the ONRC may refer the case to a court of law and seek the dissolution of the legal entity.”, mentioned Cristian Botezatu, Tax Assistant Manager, Mazars Romania.
Currently, the Register of the Real Beneficiary has been operationalized by ONRC starting with February 2020 and can be accessed by the reporting entities defined under Law 129/2019 (credit institutions, financial institutions, real estate agencies, notaries, lawyers, consultants tax authorities, auditors, etc.) or any persons who can demonstrate a legitimate interest, based on an application form addressed to ONRC (the applicable form and procedure can be found on the ONRC website).