Agribusiness remains one of the most active sectors for investment in Romania, driven by large-scale land operations, consolidation trends, EU subsidies, and increasing interest from international investors.
However, transactions in this sector often carry specific tax risks that go beyond standard corporate due diligence.
Unlike other industries, agribusiness combines land ownership rules, sector-specific tax incentives, operational subsidies, and fragmented reporting structures, making tax due diligence a key value driver in any deal.
This article outlines the most relevant tax aspects to consider when acquiring or selling an agribusiness in Romania.
1. Structuring the Deal: Share Deal vs. Asset Deal matters even more in agriculture
As in any M&A transaction, the first key decision is structure: share deal or asset deal. In agribusiness, this choice is particularly sensitive because:
– Share deals transfer historical tax liabilities, including those linked to land ownership, subsidies, and past compliance;
– Asset deals may trigger VAT and transfer tax implications depending on the nature of assets transferred;
– Agricultural land ownership is subject to specific legal restrictions and procedural requirements.
From a tax perspective, buyers typically prefer asset-level visibility of risks, while sellers tend to favour share deals to optimise capital gains treatment.
2. VAT and operational structuring in agribusiness
VAT in agribusiness is often more complex than in other sectors due to:
– Mixed VAT regimes depending on goods (raw agricultural products vs processed goods);
– Input VAT deduction challenges in fragmented supply chains;
– Transactions involving land, equipment, and agricultural services within the same group structure;
– Cross-border trading of agricultural products within EU frameworks.
For buyers, one of the key risks is historical VAT compliance gaps at farm or subsidiary level, particularly in older or family-owned structures.
3. Transfer Pricing and intra-group structures
As agribusiness groups consolidate, intra-group transactions become increasingly relevant.
Typical areas reviewed in due diligence include:
– Sale of agricultural produce between group entities;
– Shared services (management, logistics, procurement);
– Financing arrangements within the group;
– Use of centralized trading or export entities.
Even in “traditional” agriculture, transfer pricing documentation is often limited or inconsistent, which can lead to post-acquisition adjustments or audit exposure.
4. SAF-T and digital compliance exposure
Romania’s digital reporting framework (including SAF-T) is increasingly relevant in agribusiness due to:
– Multiple operational sites (farms, storage, logistics units);
– High volume of transactions with variable documentation quality;
– Historical ERP fragmentation in older groups.
In practice, SAF-T analysis often highlights discrepancies in:
– Fixed assets registers (especially agricultural machinery and infrastructure);
– Inventory valuation and movement tracking;
– Consistency between accounting records and tax reporting.
These issues do not always create immediate tax liabilities, but they increase tax inspections risk and post-deal remediation costs.
5. Post-Acquisition tax integration risk
One of the most underestimated aspects in agribusiness deals is post-closing integration.
Main risks may include, inter alia:
• Misalignment between group tax policies and local Romanian practice;
• Harmonisation of accounting systems (which directly impacts tax reporting).
Without early planning, these issues often result in unexpected tax adjustments in the first 12–24 months after acquisition.
Tax due diligence in agribusiness is no longer limited to verifying compliance with corporate income tax and VAT rules. It now requires a broader assessment of subsidy structure, operational tax incentives (if historicaly applied), transfer pricing within agricultural supply chains, digital reporting consistency (SAF-T, e-invoicing), historical compliance patterns.
In many transactions, the key value drivers are not the visible assets, but the tax and regulatory risks embedded in how those assets have been managed over time. For both buyers and sellers, early tax structuring and robust due diligence can significantly influence deal value and post-transaction stability.
