Following our previous article related to the mandatory requirements for performing the patrimony inventory, at least annually at the end of the financial year, today we would like to emphasize on one specific aspect related to the technological losses, which are inherent during the production process, creating the impact both on the entity’s activity and on its fiscality, namely profit tax and value added tax.

The Romanian fiscal code limits the deductibility of the technological costs, considering as deductible expenses only the technological losses that are included in the entity’s own consumption norm necessary for manufacturing the products. Consequently, considering the insufficient fiscal provisions related to the interpretation of the technological losses, and the definition and structure of the consumption norm, we recommend the entities to formalize the internal procedures, which will enable the Entity to support the substance and the reality of its production processes, including the generating factors of the technological losses. The definition, calculation method, and flow of operations and related activity controls regarding the technological losses should be documented into the entity’s accounting policies manual.

In the absence of these formal procedures and documentation, the technological losses could be considered as non-deductible by the tax authorities.