Intra-group transfer of EUR 500,000 to a non-EU state: a case study

A corporate client needed to transfer EUR 500,000 to an affiliated company in a non-EU state. The bank required supporting documentation, and behind the payment lay three separate economic flows, each with its own tax treatment. We rebuilt the contractual basis, prepared the transfer-pricing file and put together the compliance package. The transfer was executed in full, with no unwarranted withholding tax and no subsequent adjustments.

The transaction at a glance

• Transaction value: EUR 500,000
• Destination: an affiliated company in a non-EU state that has a double-taxation treaty with Romania
• Nature of the engagement: legal and tax advice, the transfer-pricing file, assistance in dealing with the bank
• Duration: approximately 6 weeks, from initial analysis to execution of the payment
• Team: a lead attorney and a tax consultant, working alongside the client’s finance department

Background

The client is a Romanian manufacturing company, part of a group with non-EU shareholders. The commercial relationship with the parent company had been running for several years: goods delivered consistently, technical and administrative support received from the group, plus financing granted by the shareholder during a growth period.

The problem wasn’t a lack of funds. It was that, for several years, the relationship had run on trust and invoices, not contracts. When the payment amount reached EUR 500,000, the bank requested supporting documents, and the client realised it had nothing to show — neither to the bank, nor in the event of a tax audit.

Why it’s not “just a bank transfer”

When money moves between affiliated companies, across borders, outside the European Union, a seemingly simple payment simultaneously triggers three risk areas.

1. The risk of transfer-pricing adjustment

Transactions between related parties must comply with the arm’s-length principle. If the prices applied within the group are not documented and justified, the tax authority can reassess the transaction and adjust the taxable base to the market’s central tendency. The consequence is not a token fine, but additional tax plus accessories, calculated retroactively.

2. The risk of withholding tax

Not all components of a foreign payment are treated the same way. The value of goods is not taxed at source in Romania, but income from management and consultancy services, or interest paid to a non-resident, generally falls under the standard 16% rate unless a double-taxation treaty applies. And the treaty does not apply automatically: without a tax-residency certificate valid at the time of payment, the domestic regime applies. Where a transaction is classified as artificial and the payment is made to a state with which Romania has no tax-information exchange agreement, the Fiscal Code even provides for a 50% rate.

3. The operational risk, at the bank counter

Credit institutions have their own know-your-customer and anti-money-laundering obligations. For a transfer of this value, to a non-EU state, to an affiliate, the bank requires the contractual basis and the economic justification. Without them, the payment simply doesn’t go through, no matter how legitimate the underlying transaction is.

What we did

1. We broke the amount down by the legal nature of the flows

The first step wasn’t drafting a document — it was analysis. The EUR 500,000 wasn’t a single transaction, but three: payment for goods delivered, remuneration for support services provided by the group, and repayment of financing granted by the shareholder, plus interest. Each component has a different tax treatment, a different type of contract, and different supporting documentation. Treating them as one lump sum was exactly the mistake that would have created exposure.

2. We rebuilt the contractual basis

We drafted the intra-group services agreement, with a concrete description of the services, the benefit received by the Romanian company, and the method used to determine remuneration, as well as the loan agreement, with a repayment schedule and an interest rate within the market range. The contracts weren’t templates pulled from somewhere: they were built around the economic reality that already existed, so as to document it, not contradict it.

3. We prepared the transfer-pricing file

We prepared the file with a description of the group, the functional analysis, the comparability analysis, and the justification for the method chosen for each transaction individually. The timing mattered: the rules tightened with the new tax-authority order applicable to transactions carried out from 2026 onward, which recalibrates the documentation thresholds, assesses them separately for each transaction with each affiliate, and expands the comparability-study requirements. For intra-group services and financing, the documentation thresholds are reached much faster than most entrepreneurs expect.

A practical detail that matters enormously: during an audit, the file must be produced within a matter of days. A file that doesn’t already exist cannot be built in that time frame.

4. We prepared the tax package and the bank package

We obtained and verified the beneficiary’s tax-residency certificate, determined the withholding-tax treatment for each component of the payment, and issued a written tax opinion the client can rely on with both the bank and the tax authority. We handed the bank a complete, coherent set: contracts, invoices, the economic justification for the transaction, and supporting correspondence. The payment was processed with no further requests.

The outcome

• EUR 500,000 transferred in full, with no bank hold-up
• Zero tax adjustments and zero unwarranted withholding tax
• About 6 weeks from the first call to execution of the payment

Beyond the transaction itself, the client came away with a structure it can keep using: framework agreements valid for future flows, a documented pricing methodology, and a file that gets updated annually, instead of being rebuilt in a panic at every audit.

Four takeaways

• Documentation comes before, not after. The cost of preparing a transfer-pricing file is a fraction of the additional tax and accessories that its absence can generate.
• “We’re in the same group” is not a tax justification. For the authority, affiliation doesn’t simplify the analysis — it triggers it.
• The tax-residency certificate must exist at the time of payment. Obtained afterward, it can turn a routine transaction into a costly correction.
• The bank is a real filter, not a formality. A file built for the tax authority will generally also satisfy the bank’s compliance requirements. The reverse is not true.

Do you have financial flows within an international group?

If your company pays or receives amounts from affiliated companies abroad (services, royalties, loans or the delivery of goods), we review your exposure and build the necessary documentation before it’s requested of you. Book a discussion.

Confidentiality note. This case study has been fully anonymised. The client’s name, the destination state, the exact field of activity and other identifying details have been omitted or changed, and the account has been written so that the transaction cannot be attributed to a specific client. This material is for informational purposes and to illustrate our professional experience; it does not constitute legal or tax advice for an individual situation. The legal framework described is the one in force at the date of publication and may change.