Clarifications regarding the presentation of deferred taxes determined by constituent entities regulated under Law no. 431/2023

On 13 March 2026, Order of the Ministry of Finance no. 203 was published, approving the clarifications regarding the presentation of deferred taxes determined by constituent entities regulated under Law no. 431/2023 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups, under the application of the accounting regulations approved by Order of the Ministry of Public Finances no. 1802/2014 (“OMFP no. 1802/2014”) on the approval of Accounting Regulations regarding individual and consolidated annual financial statements, and the transition to the application of the accounting regulations approved by Order of the Ministry of Public Finances no. 2844/2016 (“OMFP no. 2844/2016”) on the approval of regulations compliant with the International Financial Reporting Standards (IFRS).

A. Provisions applicable to constituent entities applying the Accounting Regulations regarding individual annual financial statements and consolidated annual financial statements, approved by OMFP no. 1802/2014, as subsequently amended and supplemented:

• For the purpose of determining adjusted covered taxes, constituent entities that apply the specific rules regarding the calculation of the domestic top-up tax under Law no. 431/2023 and that prepare stand-alone financial statements in accordance with OMFP no. 1802/2014 shall calculate and disclose the amount of deferred tax in the explanatory notes to the annual financial statements, without recognizing it in the accounting records.
• The determination of deferred tax assets and liabilities shall be carried out in accordance with the provisions of IAS 12 “Income Taxes”. The disclosure requirements set out in IAS 12 do not apply.
• The deferred tax disclosed in the explanatory notes to the annual financial statements shall be determined by reference to the carrying amount of balance sheet items, as determined in accordance with the accounting regulations approved by OMFP no. 1802/2014, as subsequently amended and supplemented, and their tax base.
• The amount of deferred tax corresponding to the profit or loss for the financial year shall be presented separately from the deferred tax related to retained earnings.
• These provisions apply starting with the annual financial statements for the 2025 financial year. Entities that have opted for a financial year different from the calendar year, in accordance with the accounting law, shall apply these provisions starting with the first elected financial year beginning after 1 January 2025.
• The provisions of Order no. 203/2026 also apply to units without legal personality in Romania belonging to legal entities established in the EU, as well as to permanent establishments in Romania belonging to legal entities established in the EU. These entities shall disclose deferred tax in Form code 30 “Informative data”, which forms part of the annual accounting reporting package.
• Entities that no longer fall under the scope of Law no. 431/2023, as subsequently amended and supplemented, shall no longer apply the provisions relating to the presentation of deferred taxes starting with the annual financial statements for the financial year in which they cease to meet the relevant criteria.

B. Provisions applicable to constituent entities that opt to apply Accounting Regulations compliant with the International Financial Reporting Standards, approved by OMFP no. 2844/2016, as subsequently amended and supplemented:

• Constituent entities may transition to the application of the accounting regulations approved by OMFP no. 2844/2016, as subsequently amended and supplemented, starting with the annual financial statements for the 2025 financial year, provided they assess that they have the capacity to apply those regulations. These entities shall organize and maintain their accounting records in accordance with OMFP no. 2844/2016 starting with the 2026 financial year.
• Constituent entities that transition to the application of the accounting regulations approved by OMFP no. 2844/2016, as subsequently amended and supplemented, after 1 January 2026, shall apply the provisions of the present order as of that date.
• For the purpose of preparing the required financial statements, entities shall apply the provisions of the International Financial Reporting Standards (IFRS), including IFRS 1 “First-time Adoption of International Financial Reporting Standards”.
• Entities that have opted for a financial year different from the calendar year shall apply the provisions of the present order starting with the first elected financial year beginning after 1 January 2025.
• For the period during which Law no. 431/2023 applies, constituent entities that, in determining deferred taxes, apply the accounting regulations approved by OMFP no. 2844/2016, as subsequently amended and supplemented, shall ensure consistency in the application of those accounting regulations.
• Entities that no longer fall under the scope of Law no. 431/2023 may continue to apply the accounting regulations approved by OMFP no. 2844/2016 or may apply the Accounting Regulations regarding individual and consolidated annual financial statements approved by OMFP no. 1802/2014.

What does this mean for you?

If your company falls within the scope of the global minimum tax, you should assess the opportunity to transition to the application of accounting regulations compliant with the International Financial Reporting Standards, as approved by Order of the Minister of Public Finances no. 2844/2016, starting with the financial statements for the 2025 financial year or thereafter. If such a transition is not performed upon the closing of the 2025 financial year, and your company falls under the specific rules regarding the calculation of the domestic top-up tax provided for under Article 18(10) of Law no. 431/2023, the company will be required to calculate and disclose deferred taxes in the explanatory notes, as part of the annual financial statements prepared in accordance with OMF no. 1802/2014.

The EY team is available to provide further details on the matters outlined above.