Law no. 207/2015 regarding the Fiscal Procedure Code was approved and became effective as of 1 January 2016. The provisions will apply to administrative procedures started after this date. Most of the amendments are technical aspects regarding fiscal administrative procedure and we will present them below as a high-level review. However, of particular interest are the amendments highlighted at the beginning.
Considering the complexity of the new tax regulations, we also recommend a more detailed analysis to be performed on a case by case basis. Our tax team will be pleased to assist you with any inquiries you may have in this respect.
In Dubio contra fiscum” principle
The newly introduced principle states that where there are uncertainties in the tax legislation, the interpretation of the law shall be done in favor of the taxpayer.
Level of late payment interest and penalties
The level of the late payment interest and penalties were reduced, as follows:
- The late payment interest was reduced from 0.03% to 0.02% per day of delay;
- The late payment penalty was reduced from 0.02% to 0.01% per day of delay; and
- The late payment interest for tax liabilities due to local budgets was reduced from 2% to 1% per month.
A new type of penalty is introduced, the non-declaring penalty, applicable to principal tax and social contribution liabilities which were not declared or were incorrectly declared. The level of the non-declaring penalty is of 0.08% per day of delay but cannot exceed the amount of the principal liability, except for cases where tax fraud is involved.
This new penalty will be applicable to tax liabilities arising after 1 January 2016, based on a tax decision issued by the tax inspectors.
The new non-declaring penalty will not eliminate the liability to pay the late payment interest. However, it will eliminate the late payment penalties and the fine for not submitting the tax statements in due time.
The non-declaring penalty will be:
- Reduced by 75% at the request of the taxpayer if the payment of the principal liability is performed;
- Increased by 100% if the principal liabilities result further to a tax fraud;
- Not imposed if lower than RON 50.
A procedure for levying such non-declaring penalty was regulated through a special Order of theNational Agency for Tax Administration.
Statute of limitation
As of 2016, the statute of limitation period of 5 years will be computed as of the 1st of July of the year following the one when the tax liability was due, as compared to the past where it was computed as of the 1st of January of the following year.
This amendment increases the period during which the tax authorities can perform tax audits on tax liabilities by 6 months.
Provisions in respect of tax audits
The maximum duration of a tax audit was regulated depending on the category of taxpayer, as follows:
- 45 days for small taxpayers;
- 90 days for medium taxpayers; and
- 180 days for large taxpayers.
If such deadline is exceeded by a period equal or higher than the periods mentioned above, the tax audit will cease without a tax audit report and can be resumes only with the approval of an hierarchical superior body and observing the statute of limitation.
The deadline for submitting a response to the official tax inspection report was extended from 3 to 5 working days for small and medium taxpayers and 7 working days for large taxpayers.
Taxpayers will have the option to request the issuance of a temporary tax decision before the tax audit is finalized in order to limit the level of the late payment liabilities to be levied.
The duration of unannounced tax audits has been limited to 30 days. An unannounced tax audit cannot be performed simultaneously with a tax audit for the same operations and tax liabilities.
A maximum term of 6 months was enacted for the adjourning of a tax audit.
The statute of limitation for the tax authorities’ right to establish tax liabilities will be suspended by a tax audit.
Provisions in respect of appeals
The deadline for submitting an appeal has been extended from 30 to 45 calendar days.
As a novelty, in case an appeal is not resolved within 6 months, the taxpayers have the right to bring legal action in court.
Also, an option to verbally submit an appeal has been regulated.
Transfer Pricing File (TPF) requirements
Taxpayers are obliged to prepare and possess transfer pricing files, without a tax authority request. This
contrasts with the previous Fiscal Procedure Code provisions according to which the preparation and presentation of a transfer pricing file only at the request of the tax authority. The obligation applies if the value of the transactions with related parties are in excess of certain thresholds on an yearly basis.
The thresholds will be introduced by a special Order of the National Agency for Tax Administration (still a legislative project) and they will differentiates by category of taxpayer and type of transactions (e.g. EUR 200,000 for interest, EUR 250,000 for supplies of services, EUR 350,000 for tangible or intangible goods).
Issuance of Individual Advanced Tax Rulings (IATR)
The fees for issuing IATRs have been increased from EUR 1,000 to EUR 3,000 for small and medium taxpayers and EUR 5,000 for big taxpayers.
Deadlines for settling taxpayer’s requests
Deadlines for settling taxpayer’s requests were extended for cases where additional information/ documents are required from the taxpayer or other local or foreign authorities (i.e. 2, 3 or 6 months, as the case may be).
Deadline for amending information declared as of the tax registration
The deadline for notifying any changes brought to the data initially declared when the taxpayer was registered was decreased from 30 days to 15 days.
New cases when taxpayers may be declared as inactive were introduced, namely,
- the period of the company’s existence at the Trade Registry has expired,
- the lack of statutory bodies, and
- the period for holding the space for the headquarters has expired.
In the last two cases, the taxpayer will receive an official notice with 30 days prior to being declared as inactive.