Newsletter 4/2020 – Changes of certain tax provisions

General aspects

In the Official Monitors no. 68 and 72 published on January 31, 2020 were introduced Government Ordinances 5/2020 and 6/2020, amending Law 207/2015 on the Fiscal Procedure Code, respectively Law 227/2015 on the Fiscal Code. These two acts introduce in the national legislation the provisions of some European Directives adopted at the level of the Union in the previous years, but they also bring new fiscal-budgetary measures related to the local legislation, as they are presented below.

New provisions regarding the garnishment procedures carried out by ANAF

Law 207/2015 on the Fiscal Procedure Code is amended by introducing new provisions regarding the garnishments made by the tax authorities, of which the most important ones are presented below.

The period in which the banks have to pay the executed amount changes from 3 calendar days to 3 working days.

The electronic garnishment mechanism will be coordinated by a central enforcement body set up at the level of the tax authorities. The garnishment will be cancelled electronically. Thus, at the request of the tax authorities, banks must only make the amounts in the accounts unavailable, without actually withdrawing the amounts from the accounts of the debtors. The tax authorities will electronically request from the banks information on the balances of each account and will withdraw the garnished amount from these accounts according to a predetermined algorithm, depending on the availability in each account. After reaching the amount of the garnishment, all unavailable accounts will be unlocked.

From the public statements of the decision makers within the tax authorities, this electronic process of cancelling the garnishment will be done very quickly (approximately one hour), avoiding the current situations where taxpayers could stay a few days with unavailable accounts, as well as situations where several banks were enforcing the execution of the same garnished amount.

Reporting certain cross-border transactions (implementation of DAC 6-mandatory disclosure)

The Fiscal Procedure Code provides reporting rules for certain cross-border transactions that have at least one distinguishing sign, from those mentioned in the newly introduced Annex 4 of the Fiscal Procedure Code.

The reportable arrangements are only the cross-border ones, not those that are carried out exclusively on the Romanian territory.

Reporting persons are those who design, sell, organize, make available for implementation or manage the implementation of a cross-border arrangement that is subject of reporting. This includes intermediaries such as lawyers, consultants, accountants, financial institutions, etc. The intermediaries who have the obligation to keep the professional secret will ask the relevant taxpayer for the written agreement for reporting the cross-border arrangements, and if they do not receive such an agreement, they have the obligation to notify other intermediaries involved. If there is no other intermediary, the intermediary obliged to keep the secret will notify the relevant taxpayer of this, and the reporting obligations will thus fall to the taxpayer.

The reporting method will be through a special form that will be approved by Order of the ANAF President, which will also issue guidelines for applying these new provisions.

The reporting period for any cross-border arrangement is 30 days. For the arrangements made between June 25, 2018 - July 1, 2020, the reporting deadline is August 31, 2020.

The law mentions 2 categories of distinctive signs of such arrangements: some that have to pass the test of the main beneficiary to be reportable and others that should be reported directly. Some examples of such distinctive signs are: the arrangement has the effect of converting the income into capital, donations or other categories of income taxed at a reduced rate or exempted; from the respective arrangement an intermediary may obtain a commission or interest depending on the amount of the tax benefit resulting from the respective arrangement; the arrangement has a strongly standardized structure, is available to more than one relevant taxpayer and does not require substantial customization; the arrangement includes circular transactions for the purpose of money laundering and mutual cancellation of transactions; the arrangement involves a chain of non-transparent legal or real beneficiaries.

The penalties applicable for non-reporting or delayed reporting by intermediaries or relevant taxpayers shall be sanctioned with a fine between RON 20,000 and RON 100,000. For not notifying the other intermediaries or the relevant taxpayer by the intermediaries who have the obligation to keep the professional secret, the fine is between RON 5,000 and RON 30,000.

Norms against tax avoidance practices

Ordinance 6/2020 introduces in the Tax Code new definitions, changes and provisions in order to transpose the Council Directive 2016/1164/EU. These changes detail the tax treatment in the case of payments or transactions that involve non-uniform treatments of the hybrid elements, the non-uniform treatments of the inverted hybrid elements, the non-uniform treatments of the tax residence. Such non-uniform treatments appear in situations where the same element is treated differently in different jurisdictions, thus leading to situations where double exemption or double deduction is applied (in each jurisdiction involved).

The newly introduced amendments to the Tax Code provide for measures against such practices.

Amendments to Ordinance no. 6/2019 regarding tax relief measures

Regarding the granting of tax relief measures, the main novelty is the elimination of the threshold of RON 1 million over which the remaining tax obligations as at December 31, 2018 could be restructured. Following this new provisions, one may restructure also taxes due under the amount of RON 1 million.

The restructuring of the taxes due may be requested by the debtors who may no longer reschedule their tax payments because they do not have available funds, or by the debtors that have the tax obligations guaranteed.

Notifying the intention to restructure the tax obligations should be made between February 1^st and March 31^st, 2020 (the previous deadline was October 31^st, 2019). The deadline for submitting the restructuring request becomes July 31^st, 2020, initially being February 8^th, 2020.

If the request for restructuring is not filed within the deadline or is rejected, the foreclosure procedure will start or continue from the deadline or from the date of communication of the rejection.

More details on the conditions, the restructuring procedure, the restructuring plan or the initial form of this legislation for the granting tax relief, may be found in our Newsletter no.11 from 30.09.2019.

Extension of deadlines regarding the Single Tax Return

For the year 2020, the deadline of March 15^th provided for the submission of the Single Tax Return Declaration and Form 230 is extended until May 25^th, 2020 inclusive. May 25^th, 2020, is also the new payment deadline for the income tax and social security contributions that had the initial payment deadline on March 15^th, 2020.

Disclaimer

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