Major amendments to the tax procedure code
Law no. 295/2020 amending and supplementing Law no. 207/2015 on the Tax Procedure Code and approving fiscal budgetary measures, effective as of 24 December 2020, implemented major procedural amendments, most of which are beneficial to the business environment and intended to bring additional balance, clarity and objectivity in the relationship between the tax authorities and the taxpayers.
Among the major amendments, we highlight (i) the reorganization of the appeal settlement activity, (ii) the extension of the cases of nullity of tax administrative documents, (iii) the administrative and judicial impact of referrals to the criminal authorities – amendments based on proposals to which BirișGoran has contributed extensively over time, by actively taking part in defining, drafting, promoting and/or debating on them.
We hereinafter present the major amendments under Law no. 295/2020
RELATIONSHIP BETWEEN THE TAX AUTHORITY AND THE TAXPAYERS
The provisions on the publication by ANAF of the taxpayers’ tax risk class/subclass on
its website have been removed; .
The provisions on giving the taxpayer’s consent (for providing information subject to tax secrecy, requesting a tax certificate by another person than the taxpayer) have been amended, and the consent now has to be “express and unequivocal”; the provision previously referred only to a “written consent”. The measures are intended to extend the ways for giving such consent including by specific electronic means (internet/mobile banking, electronic identification means);
The possibility to conclude protocols regarding the exchange of information representing tax secrecy with the tax authority has now been extended to all applicants which, given the nature of their business, often request such information with the taxpayer’s consent (such as banking and non-banking financial institutions); before only the public authorities had this possibility;
The possibility for tax advisors/accounting experts to use powers of attorney specific to
such professions when representing their clients in the relationship with the tax authority has been expressly stipulated;
The taxpayers with no domicile in Romania are not obliged to appoint a proxy in the relationship with the tax authority, when such taxpayer communicates with the tax
authority through electronic means of remote transmission;
The on-site findings made by the central tax authority can be delegated to another central tax authority, in which case the taxpayer is notified in writing about such delegation;
The possibility to extend/modify deadlines for the fulfillment of certain obligations by the taxpayers in well-justified cases through order of the Ministry of Public Finance has been introduced;
Considering the provisions of Law 203/2018, it has been clarified that the deadline for the taxpayers to pay half of the minimum fines provided under the Tax Procedure Code is 15 days;
R E G I S T R A T I O N / I D E N T I F I C A T I O N O F T H E T A X P A Y E R S
In case of non-resident individuals who are initially identified by a tax identification number, the related tax information is taken up if they subsequently obtain a personal identification number;
The possibility to use the tax identification code for the fulfillment of tax liabilities corresponding to periods preceding the date of tax registration has been stipulated;
In case of non-resident persons requesting the opening of a bank account/renting of a
safe deposit box, the application for a tax code does no longer require the submission of supporting documents by the credit institution. Furthermore, the tax registration certificate will no longer be communicated to the credit institution, but kept by the tax authority, until the nonresident taxpayer picks it up, and the credit institution will be delivered information on the tax registration;
The definition of the secondary office has been clarified so as to expressly exclude (i)
the domiciles from which the employees carry out their activity and (ii) the places where a taxpayer carries out its activity on a contractual basis, for a limited period of time;
TAXPAYERS’ LIABILITY TOWARDS ANAF
It clarifies that not only individuals who exercise liberal professions, but also individuals who carry out independent activities (authorized individuals, individual enterprises, family enterprises) are liable for the tax liabilities with their personal patrimony, if the assets from the business patrimony are not sufficient;
If during the tax audit, the legal entity ceases to exist or the individual dies, the tax audit continues with that person’s successors, if any, in which case the tax obligation is assessed on the successors;
It sets forth that the transfer of the tax obligation upon the person that takes it over is performed through a tax administrative document which indicates the obligation;
If the taxpayer has other outstanding tax liabilities, after the insolvency is declared,
the tax authorities will draw up and communicate the additional minutes which record the tax obligations arising after the insolvency is declared;
EXPRESS CASES OF NULLITY OF TAX ADMINISTRATIVE DOCUMENTS
In the context of identification of repeated practical cases of failure to comply with the
obligations of the tax authorities as regards the exercise of the right of assessment, the conduct of the tax audit/re-conduct of the tax audit, the following cases of nullity of tax administrative documents have been provided:
Failure of the tax authorities to comply with the obligation to state reasons for the different approach than the preliminary opinion of the tax authority issued in writing to the taxpayer, the previous fiscal ruling of the tax authority/courts of law in similar cases;
If, upon re-conducting the tax audit, the tax authorities fail to comply with the provisions of the settlement authority according to the appeal settlement decision;
Failure to observe the legal deadline to complete the tax audit (twice the term of the tax audit provided under art. 126, par. (1) of the Tax Procedure Code), without complying with the provisions on resuming the audit, results in the nullity of the tax audit report and the tax decision;
Furthermore, the tax audit reports/tax decisions issued for matters that the tax audit authorities should refer to the criminal investigation authorities are also null and void;
NEW REGULATIONS ON REFERRALS TO THE CRIMINAL INVESTIGATION AUTHORITIES
If there is reasonable doubt regarding any infringement committed, the tax auditors will draw up the minutes of referral to the criminal investigation authorities, without drawing up a tax audit report and a tax decision for the amounts subject to criminal referral. As mentioned above, the tax audit report and the tax decision issued for the amounts subject to criminal referral will be null and void.
For the amounts which are not subject to criminal referral, the tax audit report and the tax decision will be further issued;
Furthermore, the limitation period is suspended for the term of settlement of the criminal case (from the date when the matter is brought before the criminal investigation authorities and the date when the settlement of the criminal case becomes final).
Previously, the tax authorities would issue both referrals to the criminal investigation
authorities and a Tax Audit Report and a Tax Decision, based on mere suspicions of any
criminal deeds committed.
Subsequently, in the administrative appeal phase, the appeal settlement authority would
order the suspension of the settlement until the criminal case was solved (considering the
findings of the criminal authorities relevant for determining the tax implications). Thus, the taxpayer was assessed before the factual situation was clearly established, based on
mere suspicions of the tax authorities. At the same time, the possibility to appeal the tax
decision on the merits was practically blocked.
We deem that this package of measures actively supported by BirișGoran will have a double positive impact for the taxpayers as (i) the tax authorities will no longer draw up
criminal referrals just as easily (such referral practically postponing the issuance of the tax
decision and the collection of income to the state budget) and (ii) the tax authorities will
have to consider the findings of the criminal authorities before issuing tax decisions, so that no tax decisions will be issued based on mere suspicions of the tax authorities.
REORGANIZATION OF THE APPEAL SETTLEMENT ACTIVITY
The settlement of appeals against tax administrative documents issued by the central tax authority (including the related positions and personnel) will be subordinated to the Ministry of Public Finance, within 6 months from publication of Law no. 296/2020.
Since the settlement of appeals against tax administrative documents is an activity of tax receivable management, such reorganization led to the Ministry of Public Finance and the subordinated institutions being included in the definition of the central tax authority.
This measure should bring additional independence and objectivity as regards the rulings of the appeal settlement authority.
APPEAL SETTLEMENT PROCEDURE
It has clarified that the tax authority’s failure to solve the applications from taxpayers for the issuance of a tax administrative document is subject to Administrative Litigation Law no. 554/2004, and the taxpayers may refer to the administrative litigation court in order to compel the tax authorities to solve the applications submitted;
The possibility to also appeal the amounts and the measures not established by the tax authorities, but for which there is such obligation, has been expressly stipulated, allowing any potential omissions to be rectified through an administrative appeal;
It sets forth the obligation of the tax audit authorities which issued the tax administrative document to prepare the appeal file along with a report including settlement proposals and to submit them to the competent settlement authority within maximum 5 days from receipt;
It has introduced a specific provision on the obligation of the settlement authority to ensure, upon request, the taxpayer’s access to evidence related to the settlement of the
tax appeal (according to the CJEU recitals in Ispas case C-298/16);
In case of annulment rulings related to the verifications of the personal fiscal situation,
it has introduced a 240-day period from the communication of the decision in which the tax authorities have the obligation to conclude the new tax administrative document;
It has introduced the mechanism for reexamination of the settlement decision, at the request of the taxpayers, in the following cases which impact the ruling reached:
Omission to analyze legal provisions that would have fundamentally changed the ruling reached;
Issuance of a decision by the Central Tax Commission, a court decision of the High Court of Cassation and Justice or the Court of Justice of the European Union, with different interpretation than the ruling reached;
Following the reexamination, the settlement authority may confirm the previous ruling or may revoke it and issue a new decision;
The application for reexamination may be submitted during the trial of the case (in case of settlement decisions which are subject to court proceedings) or within one year from the communication of the settlement decision (in case of settlement decisions which are not subject to court proceedings);
TAX AUDIT
It has clarified that in calculating the deadline to complete the tax audit (twice the term
provided under art. 126, par. (1) of the Tax Procedure Code), the suspension periods are
not taken into consideration;
It has introduced new cases where the tax authority may order the suspension of the tax audit:
For carrying out verifications of other members of the tax group;
When the tax authority is notified that a judicial proceeding is ongoing against the taxpayer in relation to relevant means of evidence, or when financial-accounting documents have been taken by the criminal investigation authority, without being provided to the tax audit authority; In such case, the suspension period can exceed six months from the suspension date, and the audit will be resumed after the completion date of the judicial proceeding or after the date when the court decision becomes final, or from the date when the tax authority has access to the documents of the taxpayer.
If the taxpayer ceases to exist during the tax audit, the audit continues with its successors, if any;
Clear rules have been introduced with regard to the commencement date of the suspension (the date indicated in the decision or, if not indicated, the delivery date of the decision) and the termination date of the tax audit suspension, the tax authority having the obligation to issue the deed of suspension termination and resumption of the tax audit within 10 days from cessation of the reason for suspension or lapse of the suspension period;
It has clarified that, during the suspension of the tax audit, the taxpayer is not obliged
to collaborate (provide information, documents and explanations);
It has introduced the taxpayer’s possibility to appeal the decision to suspend the tax audit;
It has expressly introduced the taxpayer’s right to be informed on the means of evidence obtained by the tax authorities as a result of actions which constituted grounds for suspension, in accordance with CJEU Judgment in Ispas case (C-298/16); It has introduced the possibility to conduct a re-verification (for periods which were previously subject to tax audit), at the request of the taxpayer, in case of appearance of information unknown to the taxpayer which influence the result of the tax audit conducted, and the taxpayer cannot rectify the tax return (considering the CJEU recitals in Zabrus case (C-81/17);
The date of the final discussion should be set at least 3 working days (5 working days in case of large taxpayers) from delivery of the draft tax audit report, and such period will not be included in the term of the tax audit;
It has introduced the obligation that the tax audit report include findings for all periods and tax liabilities mentioned in the Tax Audit Notice, and each period and tax obligation covered by the findings to be subject to a tax decision or a decision not to modify the tax base;
The obligation to inform the taxpayer of the relevant findings and the provisions on delegation of competence will also be applicable to unannounced audits;
It has introduced clear provisions on the result of the antifraud audit:
The antifraud audit is completed based on audit minutes, which are also delivered to the taxpayer;
Such minutes may constitute a means of evidence based on which a tax state of fact can be ascertained;
The taxpayer may issue a written opinion on the audit minutes within five
working days from their delivery;
As regards the verifications of the personal fiscal situation:
Following the amendments brought, the place for conducting the verification will be the headquarters of the tax authority, as a general rule, and only by way of exception, in well-justified cases, at the domicile of the taxpayer or the office of the person that provides
specialized assistance;
The term for verifying the personal fiscal situation is reduced from 365 days to 270 days, but will be calculated as of its effective commencement date, indicated in the finding minutes (being previously calculated by reference to the date mentioned in the verification
notice, although such date could be postponed);
Corresponding amendments are introduced as regards the non-issuance of a tax audit report/tax decision for matters brought before the criminal investigation authorities.
TAX RECEIVABLE COLLECTION
It has extended the provisions relating to nullity, annulment and its effects (under art. 49-51 of the Tax Procedure Code), also to the enforcement deeds;
It has introduced the exemption from the obligation to submit the tax certificate in case of sale of means of transportation, in case of use of the standard template agreement approved under the law;
It has introduced the tax authority’s obligation to refund the amounts wrongly wired by credit institutions, such as those under art. 729, par. (7) of the Civil Procedure Code (state allowances, child benefits, benefits for sick child care, maternity benefits, death benefits, scholarships granted by the state, per diems, and other special designation allowances), even if the taxpayer has outstanding liabilities;
It has introduced express provisions on the refund of the tax on dividends, as a result of the reconciliation of the dividends partially distributed during the year. To such end, the payer of dividends submits an application for refund after the repayment of the dividends by the shareholders (but in the limitation period of the right to request the refund). The
procedure will be further detailed in an ANAF order;
As regards the non-declaration penalty: It has been redefined so that it will also be applicable to the amounts established by the tax authorities ex officio (the non-declaration penalty being previously applicable only to tax liabilities established by tax audit authorities based on a tax decision) and to the amounts resulting from a subsequent customs audit;
The reduction of the non-declaration penalty by 75% is automatically applicable if the necessary requirements are met, and it is no longer conditional upon the submission of an application from the taxpayer;
The failure to comply with the obligation to make the necessary mentions on the application of the non-declaration penalty in the tax audit report results in the loss of the tax authority’s right to apply the non-declaration penalty; Express provisions have been introduced with regard to the statute of limitations applicable to the taxpayer’s right to request interest in case of amounts to be repaid from the budget (5-year period) and the
time limit from which the statute of limitations begins to run;
New clarifications have been provided as regards the possibility to appeal the decision to establish preventive measures.
PAYMENT FACILITIES
Within the staggered payment procedure, in case of associations without legal personality, a ceiling of RON 10,000 for staggered tax liabilities has been set out, below which no collaterals are required to be established;
The exemption from setting up collaterals has been introduced in case preventive seizures were established or amounts held by debtors were garnished (in this case the amounts are wired by the bank to the treasury for collateral establishment);
The value of immovable assets offered as guarantee will be determined based on the valuation report prepared by an authorized valuer, the references to indicative values established in the surveys used by the chamber of notaries public – which are not a relevant indicator in this respect – being eliminated;
It has introduced (i) the requirement that the application to replace/resize the collateral be grounded by the debtor, (ii) the possibility of the tax authority to approve or reject such application and (iii) specific rules on removing seizures from the replaced assets;
It has modified the conditions for maintaining the staggered payment validity and it has provided clarifications on the modification of the staggered payment decision;
The guarantee letters issued by nonbanking financial institutions have been removed from the list of valid guarantees according to art. 211 of the Tax Procedure Code (based on which the enforcement can be suspended, the preventive measures can be removed etc.), considering the practical difficulties faced by the tax authorities in their enforcement; The
guarantee letters submitted with the tax authorities up to the entry into force of Law
295/2020 remain valid for the term of the administration procedure;
A maximum 15-day period has been introduced for the issuer of a guarantee letter (credit institution or insurance company) to wire the amounts;
For the avoidance of the inconsistent application of the law, art. 213 and 214 of the Procedure Code, regarding the possibility to appeal the decision to establish preventive measures, respectively the unjustified refusal to solve the application to remove the preventive measures, directly in court, have been supplemented as follows: establishment of the competent court (competent administrative litigation court based on the value criterion of the tax receivable); expeditious trial proceeding; non-application of the provisions of art. 200 of the Civil Procedure Code relating to the verification and reconciliation of the writ of summons; elimination of the obligation to submit a statement of defense; enforceable nature of the judgment, and establishment of a 15-day period for appeal (which does not suspend the enforcement);
It has regulated the write-off of the undue amounts paid, for which the limitation period lapsed (except for the case where the offset took place);
It has introduced (i) the possibility to apply for a staggered payment for the liabilities
whose performance was suspended by submitting a guarantee letter, and (ii) the removal of the preventive measures which became enforceable, in case of collateral establishment;
New clarifications have been provided on the possibility to replace the seized goods with a seizure on other goods, respectively with guarantee letters, insurance policies or cash deposits, resulting in the removal of the seizure on the replaced goods;
As regards the capitalization of the seized goods:
A new rule has been set out according to which, at the fourth auction held, the good will be sold for the highest price bid, only if it is equal to at least 25% of its valuation price.
The possibility to sell the good before the auction, if at least the valuation price is obtained, has been introduced.
REGULATIONS IN THE CONTEXT OF THE INTRODUCTION OF GROUP CONSOLIDATION FOR CORPORATE TAX:
In order to carry out verifications of other members of the tax group, the tax authorities may order the suspension of the tax audit;
In case of amounts to be repaid, the same rules will be used for offsetting purposes as for the VAT group, the tax liabilities of the representative taking precedence for offset over the tax liabilities of other members;
In case of transfer pricing adjustments for transactions between members of the same tax group in the corporate tax field, the tax audit authority will make the corresponding adjustments for both members taking part in the transaction.
*N O T I C E: This Tax Alert is only provided for information purposes and is not intended to be deemed as a legal opinion; therefore, no decision can be taken based on this Tax Alert. An opinion may be provided only after analyzing the particular facts and circumstances, as well as in consideration of the issues which cannot be approached in this document. BirișGoran SPARL has copyright over this document ©2021. All rights reserved. Any distribution or reproduction of any part of or of the entire document is
prohibited in any form without the express written consent from BirișGoran.
