Circular invoicing: how a group CFO can spot A invoicing B, B invoicing C and C invoicing A
By Dr. Bogdan Năstase
The short answer
Start with your Romanian subsidiary's SAF-T file (D406): its customer and supplier lists, sales and purchase invoices and payments show every direct counterparty. Add the free trade register data on each counterparty's legal representatives. Invoices that leave and come back through linked companies are a red flag to examine, not a conclusion.
The diagram and the steps below are a working English translation of the Romanian legal texts cited next to each element. The Romanian text prevails.
The review, step by step
Does this apply to your company? Romanian SRLs and SAs, Romanian branches of foreign companies and non-resident companies with a Romanian VAT number, among others, file the SAF-T file through informative return D406; sole traders, public institutions and some professional practices do not (ANAF Order 1783/2021, annex 5, points 3 and 4, as replaced by ANAF Order 407/2025). Small taxpayers have filed since 1 January 2025 (annex 5, point 1.1 letter d).
The subsidiary files D406. Monthly or quarterly, following its VAT period, by the last calendar day of the month after the period; the Assets section once a year, by the deadline for the financial statements; the Stocks section only at the tax authority's request, by a deadline of at least 30 calendar days from the request (ANAF Order 1783/2021, annex 4, points 1, 2, 7 and 10; Fiscal Procedure Code, art. 59^1).
Read the sections that show relationships. Customers and Suppliers (name, address, tax registration code, balances), Sales Invoices and Purchase Invoices (counterparty, invoice date, payment term, invoice lines, tax code), Payments, and Products (product code, description, customs tariff code) (ANAF Order 1783/2021, annex 1, point 5).
Map the counterparties. List every tax registration code that appears both as a customer and as a supplier, and every product code that the subsidiary sells to one counterparty and buys from another. This is the part of a loop that one company's file can show: the subsidiary sells to B and buys from C.
Look up each counterparty in the trade register, free of charge. Name, registered office, status, identification numbers and the legal representatives, with whether they act jointly or separately, are free (Law 265/2022, art. 12 para. 1); every registration is published in BERC within three working days (art. 15 paras. 2 to 4). Compare: do B and C share a legal representative or a registered office with each other, or with your subsidiary?
Check VAT and inactivity status. ANAF's VAT register and its register of inactive taxpayers are public on ANAF's website (Fiscal Code, art. 316 para. 15; Fiscal Procedure Code, art. 92 para. 11).
Is the counterparty an affiliated person? Two companies are affiliated if one holds, directly or indirectly, at least 25% of the other's shares or voting rights or effectively controls it, or if the same person does so for both (Fiscal Code, art. 7 point 26 letters c and d). Shareholdings are not among the free trade register data; certificates and copies are paid, at RON 30 for a certificate (Law 265/2022, art. 11 para. 1; Order 380/C/2024, annex).
Does the loop close? If invoices return to the company where they started, establish the facts before drawing any conclusion: contracts, delivery and transport documents, payments and the economic purpose of each step (Fiscal Code, art. 11 paras. 1 and 12).
Options compared: advantages, disadvantages, risks
Option | Advantages | Disadvantages | Risks |
The subsidiary's own D406 file | Transaction-level data: customers and suppliers with tax codes, invoices with lines, payments, products (ANAF Order 1783/2021, annex 1, point 5) | Shows only the subsidiary's direct counterparties; Stocks are filed only on request (annex 4, point 9) | A late file is fined RON 1,000 to 5,000 and an incorrect or incomplete one RON 500 to 1,500; an incorrect file corrected by the next filing deadline is not fined (Fiscal Procedure Code, art. 337^1); an incorrect file also misleads the review |
The D406 files of all Romanian group companies, combined | Shows invoice flows between group companies, each of which files its own D406 (annex 5, point 3) | Covers group companies only, not third parties | Between affiliated persons, the authority can adjust revenue or expenses for direct taxes, based on the central tendency of the market (Fiscal Code, art. 11 paras. 4 and 5); for VAT, market value is the taxable base in the three cases of art. 286 para. 1 letter e), where one party lacks a full right of deduction |
Free trade register data and BERC | Free: legal representatives, registered office, status, numbers; every registration within three working days (Law 265/2022, art. 12 para. 1; art. 15) | A shared legal representative is not, on its own, one of the affiliation cases in the Fiscal Code (art. 7 point 26) | |
Certificate or copies from the trade register | The data registered and the documents filed (Law 265/2022, art. 11 para. 1) | Paid, per company: certificate RON 30, copy RON 1.50 per page (Order 380/C/2024, annex) | None specific to the option |
ANAF VAT register and register of inactive taxpayers | Public, on ANAF's website (Fiscal Code, art. 316 para. 15; Fiscal Procedure Code, art. 92 para. 11) | Shows status, not transactions | Buying from a supplier listed as inactive: no deduction of the expense or the VAT; from a supplier whose VAT registration was cancelled under art. 316 para. 11 letters c) to e) or h): no VAT deduction; exceptions for enforcement and bankruptcy (Fiscal Code, art. 11 paras. 7 and 9) |
Key takeaways
One SAF-T file shows one company's direct counterparties. A loop from A to B to C and back to A appears in it only as a sale to B and a purchase from C; combining the files of all Romanian group companies shows more of the chain.
The free trade register data show legal representatives, not shareholders. A shared director is a red flag to examine, not affiliation under the Fiscal Code.
Transactions between affiliated persons follow the market value principle: the authority can adjust them for direct taxes (art. 11 para. 4) and, in three cases, market value is the VAT base (art. 286 para. 1 letter e).
A red flag calls for establishing the facts. Qualifying them belongs to the tax authority, prosecutors and the courts.
What does circular invoicing look like in the data?
Invoices that, followed from company to company, return to the company where they started: A invoices B, B invoices C, C invoices A, often for the same goods or services. In your subsidiary's SAF-T file, only its own links are visible: a sale to B and a purchase from C. The patterns worth a question are the ones the file can show:
a tax registration code that appears in both the Customers and the Suppliers sections;
the same product code, or the same customs tariff code, in sales to one counterparty and purchases from another, in similar quantities and close in time;
payments in the Payments section that do not match the invoiced amounts or the payment terms on the invoices;
counterparties that share a legal representative or a registered office with each other or with your subsidiary.
Each pattern can have an ordinary explanation, such as toll processing, a buy-back clause or group logistics. That is why the next step is to establish the facts, not to label them.
Which data does a group CFO already have?
Three sources, none of which requires a login to ANAF's systems. First, the subsidiary's D406 file: an XML file in a standardised format, with data extracted automatically from the company's accounting systems, built on the OECD SAF-T standard (ANAF Order 1783/2021, annex 1, points 1 and 3). The accounting team that files it can send you a copy. Second, the trade register data on each counterparty, free for the basic data (Law 265/2022, art. 12 para. 1); for the step-by-step searches, see what you can check yourself, for free. Third, ANAF's public registers of VAT-registered and inactive taxpayers.
How do you combine the files of several group companies?
Treat each company as a point and each invoice flow as an arrow from seller to buyer. From every D406 file in the group, take the Sales Invoices section and write one row per invoice: seller's tax code, buyer's tax code, date, amount and product codes. A loop is a path of arrows that returns to its starting tax code. For a loop of three, a spreadsheet lookup is enough: for each pair "A sells to B" and "B sells to C", check whether C sells to A. Longer loops need a graph query, which most data analysis tools offer.
Keep the review on business counterparties, including sole traders and other authorised individuals, who invoice under a tax code. Where a counterparty is a private individual, leave the line out: the review is about business-to-business invoicing, and analysing private individuals' data needs a separate basis under the GDPR.
Why does a loop matter for the subsidiary's tax position?
Because the tax effects fall on each company in the chain. For direct taxes, the tax authority may disregard a transaction that has no economic purpose, adjusting its tax effects, or reclassify its form; it must give the facts behind that decision (Fiscal Code, art. 11 paras. 1 and 5). Between affiliated persons, transactions follow the market value principle, and the authority can adjust revenue or expenses based on the central tendency of the market (art. 11 para. 4). For VAT, market value is the taxable base between affiliated persons in three cases, each involving a party without a full right of deduction (art. 286 para. 1 letter e). For VAT, the authorities must take into account the case law of the Court of Justice of the European Union, and where an abuse of law is found, the tax authority may cancel the VAT deducted, if two conditions are met together: a tax advantage contrary to the purpose of the law, and an essential aim of obtaining it, shown objectively (art. 11 paras. 11 and 12).
ANAF also cross-checks the data. In a press release of 30 October 2026, ANAF said that its letters to taxpayers with a possible VAT risk ask them to check that their returns match the invoices in RO e-Factura, cash register data, SAF-T reports and the pre-filled RO e-TVA return (position of the authority); for what to do if you receive such a letter, see ANAF's letters on VAT risk. In its activity report for the first half of 2026, ANAF lists, among its risk analysis work, risk scenarios to identify fraudulent circuits and VAT fraud mechanisms in intra-Community transactions (position of the authority).
Is a loop inside Romania the carousel fraud the European Commission describes?
Not by the Commission's own description. The European Commission describes VAT carousel fraud, also called missing trader intra-Community (MTIC) fraud, as exploiting the fact that VAT is not immediately applied to business-to-business supplies of goods between Member States: goods bought free of VAT are resold on the domestic market with VAT, the VAT is not paid to the authorities and the trader often disappears (position of the authority). A loop between Romanian companies does not fit that description by itself. If one link in your loop is an intra-Community supply, the Commission's description becomes relevant to the review.
Does a shared director make two companies affiliated?
Not on its own. The Fiscal Code lists the cases: a holding of at least 25% of the shares or voting rights, direct or indirect, including the holdings of affiliated persons, or effective control (art. 7 point 26 letters b to d). A shared legal representative is a reason to ask who owns and who controls the two companies; the answer comes from the shareholder data and the documents filed with the trade register, not from the free data alone.
What should the CFO do with a red flag?
Write down what the data show, without labels, and ask the subsidiary's management for the documents behind each step: the contract, the delivery or service evidence, the transport documents and the payments. If a return was incorrect, the subsidiary can correct it under the Fiscal Procedure Code (art. 105). Keep the vocabulary neutral in every email and report: "red flag", "irregularity", "facts to establish". Calling facts fraud is for the authorities, prosecutors and the courts.
Who is affected?
Group CFOs and finance teams that oversee one or more Romanian subsidiaries, foreign shareholders of Romanian companies, and internal audit teams in groups with Romanian entities. The review uses data that the Romanian company already produces for its D406 filing.
What to do next
Ask the subsidiary's accounting team for the last 12 monthly or 4 quarterly D406 files.
List the tax codes that appear as both customers and suppliers, and the product codes sold to one counterparty and bought from another.
If the group has several Romanian companies, combine their Sales Invoices sections into one table and test for loops of three.
For each counterparty in a loop, read the free trade register data and check ANAF's VAT and inactive registers.
For each red flag, ask for the documents and record the facts; order a certificate (RON 30) where you need the registered data in a document you can rely on.
Frequently asked questions
Can one subsidiary's SAF-T file show a loop of three companies?
Only in part. It shows the subsidiary's own sales and purchases, so a loop from A to B to C and back to A appears as a sale to B and a purchase from C. Combining the D406 files of several group companies shows more of the chain (ANAF Order 1783/2021, annex 1, point 5).
Which SAF-T sections matter most for this review?
Customers, Suppliers, Sales Invoices, Purchase Invoices, Payments and Products (ANAF Order 1783/2021, annex 1, point 5).
Does every Romanian company file D406?
Most companies do, including SRLs and SAs, Romanian branches of foreign companies and non-residents with a Romanian VAT number; sole traders, public institutions and some professional practices are excepted (ANAF Order 1783/2021, annex 5, points 3 and 4, as replaced by ANAF Order 407/2025).
Are two companies with the same director affiliated persons?
Not on that ground alone. The Fiscal Code requires a holding of at least 25% of the shares or voting rights, direct or indirect, or effective control (art. 7 point 26).
What does it cost to file D406 late?
A fine of RON 1,000 to 5,000 for late filing and RON 500 to 1,500 for an incorrect or incomplete file; an incorrect file corrected by the next filing deadline is not fined (Fiscal Procedure Code, art. 337^1).
Is a circular invoicing pattern proof of fraud?
No. It is a red flag that calls for establishing the facts. Each pattern can have an ordinary explanation, and qualifying the facts belongs to the tax authority, prosecutors and the courts.
Sources
Fiscal Code (Law no. 227/2015), art. 7 point 26, art. 11 paras. 1, 4, 5, 7, 9, 11 and 12, art. 286 para. 1 letter e) and art. 316 para. 15, consolidated form on static.anaf.ro
Fiscal Procedure Code (Law no. 207/2015), art. 59^1, art. 92 para. 11, art. 105 and art. 337^1, consolidated form on static.anaf.ro
ANAF Order no. 1783/2021 on the SAF-T file, annex 1 points 1, 3 and 5 and annex 4 points 1, 2, 7, 9 and 10, Official Gazette Part I no. 1073 of 9 November 2021, consolidated form on legislatie.just.ro
ANAF Order no. 407/2025 replacing annex 5 to ANAF Order no. 1783/2021, points 1.1, 3 and 4, Official Gazette Part I no. 310 of 8 April 2025, on legislatie.just.ro
Law no. 265/2022 on the trade register, art. 11 para. 1, art. 12 para. 1 and art. 15, Official Gazette Part I no. 750 of 26 July 2022, on onrc.ro, as amended by Law no. 222/2023, on onrc.ro
Order no. 380/C/2024 of the Minister of Justice approving the tariff for information and documents issued from the trade register, annex, on onrc.ro
European Commission, VAT carousel fraud (position of the authority), on taxation-customs.ec.europa.eu
ANAF, press release no. 1010 of 30 October 2026 (position of the authority), on static.anaf.ro; activity report for the first half of 2026 (position of the authority), on static.anaf.ro; SAF-T page, on static.anaf.ro
Last updated: 2 November 2026. This article is for information only and does not replace an analysis of your specific situation. Drafted with AI assistance; references were verified against the primary sources.
Questions about intercompany flows in your Romanian subsidiary? Primary contact: Bogdan Năstase · Managing Partner, International Lead
