Amendments to the legal framework for combating tax evasion

The Romanian authorities have introduced new measures aimed at combating tax evasion. Out of the main amendments, we outline, for exemplification purposes the introduction of new acts constituting tax evasion and an increase in the sanctions for certain acts.

The list of criminal offences that qualify as tax evasion has thus been supplemented with the following:

• the use in bad faith of the RO e-Invoice system to create the appearance of legality for fictitious transactions or to conceal the actual flow of transactions involving goods and services
• the use of electronic cash registers not connected to the national tax monitoring system or the alteration of electronic cash registers resulting in the non-transmission of data or transmission of fictitious data
• failure to withhold taxes and/or social security and health insurance contributions.

Some examples of cases where failure to withhold taxes can occur are:

• payments for services rendered on the territory of Romania, payments for consultancy and management services, or interest and royalty payments – if, at the moment of payment, the taxpayer is not in possession of the required documents, allowing it to benefit from exemption (or, as the case may be, from the application of a reduced rate, in the case of interest and royalties)

• payments of rent, lease payments, payments of other income to resident individuals – if the taxpayer does not withhold the related tax.

In addition, the amendments to the law introduce stricter sanctions for acts of tax evasion (in terms of fines and imprisonment), with the severity thereof in certain circumstances being decided based on the amount of prejudice caused.

If the amount of the prejudice caused and the interest and penalties applied are paid, then the criminal offense will either not be punished or the severity of punishment will be reduced.

Source: Law no. 126 on measures to strengthen the capacity to combat tax evasion and to amend and supplement certain normative acts, as published on 13 May 2024.