Moldova

Moldovan tax law does not provide for group taxation.

Transfer pricing

General rules on transactions with interdependent persons

In Moldova, taxpayers who should not follow the transfer pricing regulations are required to comply with the provisions specified in Title II of the Tax Code if they have transactions with interdependent persons.

The concept of interdependent persons is defined in the Tax Code as a family member of the taxpayer or a person who controls the taxpayer, is controlled by the taxpayer, or is under common control with the taxpayer by a third party.

• The taxpayer’s family includes spouse, parents, children and their spouses, grandparents, grandchildren and their spouses, siblings and their spouses, great-grandparents, great-grandchildren and their spouses, uncles/aunts and their spouses, nieces/nephews and their spouses, great-uncles/aunts and their spouses, cousins and their spouses, and the same relatives on the spouse’s side.
• Control is defined as holding (directly or through one or more interdependent persons) at least 50% of the capital or voting rights of a person. In this case, an individual is considered to hold all participation shares owned directly or indirectly by their family members.

With reference to the transactions carried out by Moldovan companies with interdependent persons, Moldovan tax law provides the following specific provisions:

• The income obtained from economic transactions performed with shareholders or other interdependent persons at a price lower than market value will be adjusted for tax purposes to the market value. The income obtained by taxpayers carrying out entrepreneurial activity from economic transactions with individual founders or other interdependent individuals who do not carry out entrepreneurial activity, obtained at a price lower than the market price, is adjusted for tax purposes to the market price.
• Losses obtained following the sale or exchange of property, the performance of works, and the provision of services, carried out directly or mediated between affiliated parties, will be allowed for deduction if the arm’s-length principle has been applied in determining the price for these transactions. No deduction is allowed for expenses incurred in relation to related parties if no justification is available for the payments and if such expenses do not represent necessary and ordinary business expenses.

Transfer pricing rules

The Republic of Moldova recently formally introduced its first transfer pricing regulations, which follow the Organisation for Economic Co-operation and Development’s (OECD’s) Transfer Pricing Guidelines.

Law no. 356, dated 29 December 2022, introduced the transfer pricing concept into the Moldovan Tax Code along with general rules related to transfer pricing reporting and documentation requirements.

The legislation enters into force on 1 January 2024. Further, on 9 February 2024, the Moldovan authorities approved the secondary legislation, containing guidance on the contents of the transfer pricing documentation and details regarding the application of the law.

Multinational enterprises operating in Moldova and Moldova-headquartered groups (limited only to transactions between resident taxpayers, where one or both taxpayers are residents of free economic zones / information technology parks or they apply different rates and/or have different taxable bases for CIT) should review their related-party transactions and documentation in view of compliance with the arm’s-length principle and further transfer pricing documentation requirements. Where appropriate, such groups should consider adjusting their operational and pricing models in seeking to avoid potential transfer pricing disputes with the Moldovan tax authorities and related sanctions due to non-compliance with the new regulations.

Materiality thresholds and other legal requirements

Taxpayer that carries out transactions with related parties whose aggregated value during a tax period, calculated as the sum of all transactions with all affiliated parties, excluding VAT, equals or exceeds MDL 20 million is required to prepare transfer pricing information and, upon request of the State Tax Service, to submit the transfer pricing documentation file.

Documentation requirements

A Moldovan taxpayer must prepare two types of documents for transfer pricing purposes:

• A transfer pricing form, generically named 'information on related-party transactions', due by the 25th day of the sixth month following the end of the tax period.
• A transfer pricing file must be submitted within 120 days from the request by the State Tax Service, but not earlier than the deadline for submitting transfer pricing information.

Penalties

According to the new legislation, the following penalties will apply:

• Late presentation of the information on related-party transactions is sanctioned with a fine of MDL 30,000 to MDL 50,000.
• Presentation of incorrect information on related-party transactions (similar to a tax return) that led to the reduction or avoidance of tax obligations is sanctioned with a fine of MDL 60,000 to MDL 90,000 (applicable for tax inspections initiated by the Moldovan tax authorities for the tax periods starting with 2028).
• Failure to present the information on related-party transactions is sanctioned with a fine of MDL 100,000 to MDL 150,000.
• Late presentation of the transfer pricing file is sanctioned with a fine of MDL 30,000 to MDL 50,000.
• Presentation of the transfer pricing file with incorrect information is sanctioned with a fine of MDL 150,000 to MDL 200,000 (applicable for tax inspections initiated by the Moldovan tax authorities for the tax periods starting with 2028).
• Failure to present the transfer pricing file is sanctioned with a fine of MDL 300,000 to MDL 500,000.

As of 1 January 2025, the concept of an ‘advance price agreement’ (APA) came into force. 

Thin capitalisation

Moldovan tax law does not provide for a specific thin capitalisation regime.

The deductibility of interest expenses follows the deductibility regime as described under Interest expenses in the Deductions section.

Controlled foreign companies (CFCs)

Moldovan tax law does not contain CFC provisions.