The Standard Audit File for Tax (SAF-T) becomes mandatory starting 2022. Large taxpayers must submit the file beginning with January 2022, medium taxpayers will follow in January 2023, while small companies will start in 2025.

This reporting model is being introduced although, according to the 2021 DESI report on digitalisation, Romania ranks 27th out of 27 EU member states and 25th for integrating digital technologies into business activities.

“We are witnessing the third major revolution in accounting because we are talking about standardising reporting across the entire bookkeeping system of a company. The SAF-T model chosen by Romania is among the most complex, since it requires monthly or quarterly reporting of all accounting, financial and tax information recorded in the books. Some countries implemented simpler models, but Romania opted for the most complex form of reporting.”

explained Mihaela Rișco-Martin, Accounting Partner, Soter & Partners

At the beginning of November ANAF published Order no. 1783/2021 for implementing SAF-T, which sets out the information taxpayers must declare, the reporting template, transmission procedure and conditions, as well as the deadlines from which filing becomes compulsory.

Although large companies will have to report information from their entire accounting and tax records starting January 2022, a key question is how prepared they are to do so.

“Even if companies are required to report, many may not know how to handle it or to whom to delegate this responsibility. Until now they relied on accountants for tax matters, but this is the first time we face a situation where there might be no one able to report everything. Why? Simply because the data is so extensive, detailed and complex that it becomes extremely difficult for a company to report it all.”

explained Mihaela Rișco-Martin, Accounting Partner, Soter & Partners

Digital reporting in a country where only 17% of companies issue e-invoices

“One of the biggest challenges for companies is understanding what information needs to be reported. The second is identifying where the data resides – in internal systems or outsourced platforms. After extracting transaction data from every system, it must be reviewed to ensure accuracy and completeness so it can be mapped to the schema provided by ANAF. The real difficulty stems from the fact that transactions cannot be reported exactly as they were recorded; they need to be interpreted and sometimes reprocessed according to rules issued by the tax authority, rules that were only published this year.”

explained Mihaela Rișco-Martin, Accounting Partner, Soter & Partners

Another obstacle may arise from inaccurate data or even missing information required for reporting.

“During the analysis we can encounter incorrect data or gaps. For this reason, reviewing the accounting and tax treatment of transactions and correcting the data before deploying an IT solution that generates the .xml file can turn into another challenge.”

explained Mihaela Rișco-Martin, Accounting Partner, Soter & Partners

Although ANAF has been providing guidance on SAF-T reporting since April 2021, the actual reporting format for implementing the standard file was only published at the beginning of November. The fine for missing the deadline ranges from 1,000 to 5,000 lei, while incorrect or incomplete submissions are sanctioned with fines between 500 and 1,500 lei.

Given the limited preparation time, large taxpayers classified as such starting 1 January 2022 benefit from a grace period.

“Companies that become large taxpayers on 1 January 2022 and did not belong to this category in 2021 must submit the D406 informative return starting 1 July 2022. For those that were already large taxpayers in 2021, the obligation begins on 1 January 2022. In addition, large taxpayers subject to the reporting requirement receive a six-month grace period during which late submissions are not sanctioned. In practice, however, this does not help much because every company must organise its data correctly from the first month when reporting becomes mandatory; otherwise it may be impossible or extremely burdensome to go back and redo previously recorded transactions.”

explained Mihaela Rișco-Martin, Accounting Partner, Soter & Partners

Implementing SAF-T reporting starting January 2022 is an important milestone in the digital transformation of public institutions, especially given that Romania scores 49 points in DESI 2021 for digital public services for businesses, compared with the EU average of 75.

The main benefit of this reporting system is the simplification of reporting processes: all taxpayers will submit data in a standard format to ANAF, and in the long run these reports should eliminate the need for numerous tax checks or inspections. Authorities will also gain by simplifying risk analysis, increasing tax collection and reducing turnaround times for taxpayer requests.