If your parent finances a Romanian subsidiary through a loan and the interest was set "like a bank's" — a reference rate plus a few points — without further analysis, that same interest triggers two distinct checks at audit. The first asks whether the rate is what an independent lender would have required. The second limits how much of the interest can be deducted, regardless of the first answer.
Entrepreneurs and CFOs frequently treat intra-group interest as a single problem. In reality, these are two independent regimes, with different logics, checked separately at audit:
Concerns the level of the interest: does the rate agreed between affiliates correspond to the one independent parties would have agreed in comparable conditions (art. 11 of the Fiscal Code)? Too high an interest on a loan received inflates the deductible expense in Romania; too low on a loan granted shifts profit out of the country. Both are correctable by adjustment.
Concerns how much of the interest enters the deductible expense, regardless of whether the rate is arm's length. This is the ATAD rule transposed at art. 40² of the Fiscal Code. Even interest perfectly compliant with the market may be partly non-deductible if it exceeds the caps of this rule.
The practical consequence: it is not enough for the interest to be arm's length in order also to be fully deductible, nor the reverse. An impeccable transfer-pricing file on the rate does not exempt you from the ATAD cap, and observing the ATAD cap does not validate an overstated rate. Both must be considered from the moment the financing is structured, and the transactions are documented in the transfer-pricing file.
The most frequent error is "reference rate plus x", copied from another contract. The correct analysis starts from a concrete question: what interest would an independent lender have required from the same debtor, for the same loan, under the same conditions? The answer depends on several factors, analysed together:
The subsidiary's creditworthiness — its probability of repaying. A fragile debtor pays more; a solid one, less.
A large loan, long-term, has a different price from a short line.
Arm's length interest for a euro loan differs from that for one in lei or another currency.
A secured loan costs less than an unsecured one; a subordinated one, repaid after the other creditors, is riskier and more expensive.
A subtle but decisive technical point: the rating that counts is that of the debtor viewed as an entity, adjusted for the benefit of group membership. The OECD Guidelines recognise that mere membership of a group may improve a subsidiary's creditworthiness, even in the absence of a formal guarantee — this is so-called "implicit support". Ignoring it leads to error in both directions: either the interest is overestimated (treating the subsidiary as an isolated entity) or underestimated (applying the parent's rating to a subsidiary that would not merit it alone). The comparability analysis of the rate — on which the transfer-pricing expert report also relies — must document exactly this reasoning, not merely state a figure.
The second filter works on a completely different logic. The rule targets exceeding borrowing costs — the difference by which borrowing costs (interest and expenses economically equivalent to interest) exceed interest income and other equivalent income. The mechanism, at art. 40² of the Fiscal Code (the chapter of rules against tax-avoidance practices), works as follows: exceeding costs are deductible up to 30% of the calculation base — an indicator close to fiscal EBITDA (the result before interest, tax, depreciation and amortisation, adjusted for tax).
Above this percentage limit, however, there is a guaranteed deductible threshold, expressed in euro: the taxpayer may deduct exceeding costs up to this threshold even if they surpass 30% of the base. For exceeding costs arising from transactions with related parties, the euro threshold is lower than the general one applicable to total financing. The exact euro values are read against the text in force at the date of the analysis — these are figures subject to change at European level —, but the mechanism remains: a percentage limit (30%) doubled by a guaranteed threshold in euro, reduced for financing from affiliates. The rule applies regardless of transfer pricing: even if the rate passed the arm's length test, the portion that exceeds both the percentage and the threshold is not deductible in the current year.
The two filters do not cancel each other out — they accumulate. A group may correctly adjust the interest to market level and still find that a significant part of it is non-deductible in the current year, because it exceeds the ATAD cap. Conversely, observing the cap does not "wash" an overstated interest: ANAF (the Romanian tax authority) can adjust the rate through transfer pricing and, separately, apply the limitation. Whoever plans intra-group financing from the perspective of only one of the rules discovers the other trap at audit.
Exceeding costs that cannot be deducted in the calculation year are not lost for good: they are carried forward to subsequent fiscal years, to be deducted when the calculation base allows. The effect on cash flow remains real, however: tax rises in the year in which deductibility is blocked, and the benefit is recovered only later. At Union level there also circulates a simplification proposal (the "Omnibus" package) that would raise and index the guaranteed deductible threshold — one more reason to check the figures against the text in force at the moment of structuring.
The classic situation in small companies within groups: a shareholder or an affiliated company grants an interest-free loan. The reflex is that "there is no expense, so there is no risk". The reality is read, once again, through art. 11 of the Fiscal Code, which allows the tax authority to adjust transactions between affiliates to arm's length value.
When a company grants an affiliate an interest-free loan (or one with symbolic interest), ANAF may impute to the lender interest income at market level — because, between independents, no one would have lent for free. When the individual shareholder lends to the company interest-free, the situation is usually in the company's favour (it generates no interest expense); the adjustment risk is lower, but the repayment must correspond to a real, documented receivable, otherwise it may be recharacterised. The point to remember: the absence of interest does not mean the absence of a tax problem.
Thin capitalisation. Intra-group financing may take the form of a loan (interest, in principle deductible) or a capital contribution (dividends, non-deductible). Over-indebtedness of a subsidiary — "thin capitalisation" — is a classic signal for the inspection. When a subsidiary is financed almost exclusively through debt from the group, with minimal equity, ANAF examines whether the structure reflects an economic reality or merely transfers profit through deductible interest. The choice between debt and capital also depends on the group's architecture — a discussion held together with the holding structure.
Intra-group guarantees. When the parent guarantees a loan the subsidiary takes from a bank, the guarantee is not "free" in the transfer-pricing sense. If it improves the debtor's rating and gives it better terms, that advantage has a market value, and the guarantor would be entitled, between independents, to a guarantee fee. The fine distinction — how much of the rating improvement comes from the formal guarantee and how much from the "implicit support" of group membership (which is not remunerated) — is the terrain of disputes.
Cash pooling — the daily concentration of the group's treasury balances into a centralised account — raises specific questions: who bears the cost and who receives the interest? how is the cash pool leader remunerated — as a routine provider or as a risk-taker? The rates must reflect the position of each participant, and the synergy advantage of pooling is allocated among the participants, not appropriated in full by the pool leader. Documenting a cash pool is among the most demanding chapters of transfer pricing.
A defensible intra-group loan rests on three documentary pillars:
With real, coherent clauses: amount, maturity, rate, collateral, ranking, repayment terms. A deficient or boilerplate contract weakens the whole position.
Justification of the interest by comparison with reference instruments (the comparable uncontrolled price method is frequently applied), documenting the rating, currency, maturity and collateral.
Why the subsidiary needed financing, why in the form of a loan and on those terms. Without a business rationale, even a technically "correct" rate can be challenged.
Certain cross-border financing arrangements between associated enterprises fall within the DAC6 reporting obligation, in particular those with deductible cross-border payments that lead to a tax advantage. Financing structured through a low-tax jurisdiction may trigger a hallmark, and non-reporting is sanctioned separately. The errors that produce adjustments are typically: interest copied without analysis; the absence of a rating analysis; ignoring the ATAD cap; the free guarantee without a fee; the interest-free loan left untreated; the purely formal contract that reflects no negotiable economic reality.
It depends on the direction of the loan. If the Romanian company grants the loan at below-market interest, it loses — ANAF may impute additional interest income. If the Romanian company receives the loan at below-market interest, in principle it has an advantage (a smaller expense), but the situation is analysed at group level and may be corrected at the other end of the transaction.
No. There are two separate tests. Even a rate perfectly justified through transfer pricing may be partly non-deductible if it exceeds the cap on exceeding borrowing costs (30% of the calculation base, above the guaranteed deductible threshold in euro). The non-deductible portion is carried forward to subsequent years.
When your company grants an interest-free loan to an affiliate, yes — interest income at market level may be imputed. When the shareholder lends to the company interest-free, the risk is usually lower, but the receivable must be real and documented, and the repayment coherent, otherwise it may be recharacterised.
If the guarantee actually improves the subsidiary's credit terms (a better rating, a lower interest), then yes — between independents there would be a guarantee fee. The portion of the advantage that stems only from group membership ("implicit support"), not from the formal guarantee, is not remunerated. The delimitation is technical and must be documented.
This article is strictly informational and does not constitute legal or tax advice. Individual situations must be analysed on their specific facts. Legislative position reflected: 18 July 2026.
Deadlines run from the moment of communication. A first discussion clarifies what is being alleged, what you must justify and how the defence is built — before an estimation becomes an assessment decision.