The annulment of some ancillary tax liabilities and bonuses granted according to the Emergency Ordinance no. 107/2024

The Romanian Government has issued an emergency ordinance establishing some fiscal-budgetary measures in the field of management of budgetary receivables and budget deficit for Romania's consolidated general budget in 2024, and amending and supplementing some normative acts ("GEO").

The GEO provides for the possibility for taxpayers to benefit from the annulment of ancillary tax liabilities related to the main tax liabilities, as well as a bonus of 3% of the tax due in the case of taxpayers who pay the amounts due in full and on time.

A. ANNULMENT OF ANCILLARY TAX LIABILITIES

As a general rule, the facility applies to the main tax liabilities outstanding as of August 31, 2024, if certain conditions are met.

I. Tax liabilities subject to the GEO

The tax facilities provided by the GEO apply to the tax liabilities administered by the central tax body (including the tax liabilities individualized in enforceable titles existing in the records of the central tax body competent for recovery, as well as to the main tax liabilities established by bodies other than the tax bodies sent for recovery to the tax bodies), but also to the tax liabilities administered by the customs authorities.

The facilities do not apply to: (a) tax liabilities for which payment facilities have been granted and are in progress, as of August 31, 2024; and (b) payment liabilities established in administrative deeds whose execution is suspended under the law on August 31, 2024 inclusive.

However, the facilities also apply in these cases if after August 31, 2024 and up to and including November 25, 2024, the payment facility loses its validity or, as the case may be, the suspension of the execution of the tax administrative deed ceases.

In addition, in case of suspension of enforcement, debtors may waive the effects of the suspension of the tax administrative act in order to benefit from the annulment of ancillary tax liabilities. In this case, the debtors must submit a request for waiver of the effects of the suspension of the tax administrative deed until the date of submission of the request for annulment of the accessories.

The facilities do not apply either to amounts due to the European Union budget or to tax liabilities that are subject of ongoing criminal proceedings or to tax liabilities established by final criminal rulings.

II. Who can benefit from the annulment of accessories

The debtors who can benefit from the facilities provided for in the GEO are all categories of debtors, such as natural or legal persons, regardless of the form of ownership, associations and other entities without legal personality, natural persons who carry out economic activities independently or exercise free professions, administrative-territorial units or administrative-territorial subdivisions of the municipality of Bucharest or public institutions.

Also, among the debtors who can use the facilities provided by the GEO are debtors in insolvency for whom the due date has been reached by August 31, 2024 inclusive, regardless of the existence of a table of receivables or a receivables payment schedule.

III. Subject of the tax facilities and the conditions for granting them

The tax authorities may grant the annulment of interest, penalties and all accessories related to certain categories of main tax liabilities, if certain conditions are met.

1. The ancillary tax liabilities related to the main tax liabilities, outstanding on August 31, 2024   inclusive, are cancelled if the following conditions are cumulatively met:

a)  all main tax liabilities outstanding on August 31, 2024 inclusive, administered by the central fiscal body, shall be extinguished by any means provided by law until the date of submission of the request for annulment of accessories inclusive, but no later than November 25, 2024;

b)  all main and ancillary tax liabilities administered by the central tax body with payment terms between September 1, 2024 and the date of submission of the request for annulment of accessories, inclusive, shall be extinguished by any means provided by law until the date of submission of the request for annulment, but no later than November 25, 2024;

c)  the debtor must have submitted all tax returns, according to the tax vector, by the date of submission of the request for annulment of the accessories inclusive;

d)  the debtor submits the request for annulment of the accessories after duly fulfilling the conditions provided for in letters a) - c), until November 25, 2024 inclusive, under penalty to lose such right.

2.  The ancillary tax liabilities related to the differences in main tax liabilities additionally           declared by debtors through an amending statement correcting the main tax liabilities           with maturities  prior to August 31, 2024 inclusive, administered by the tax authority, are           annuled if the following conditions are cumulatively met:

a)  the corrective declaration is submitted starting with September 1, 2024 until the date of submission of the request for annulment of accessories inclusive, but no later than November 25, 2024, and the liabilities thus declared are extinguished until the date of submission of the request for annulment of accessories inclusive, but no later than November 25, 2024;

b)  the conditions set out in point 1 letters b) to d) above are duly met.    

This facility also applies in case of correcting errors in value added tax returns made according to the legal regulations in force.

3.  The ancillary liabilities related to the main tax liabilities with maturities prior to August        31, 2024 inclusive and cleared until this date shall be cancelled if the conditions provided        for in point 1 letters b) - d) above are cumulatively and duly fulfilled.

The above-mentioned ancillary obligations cleared by any means after the date of entry into force of the GEO are canceled and are subject to refund according to art. 168 of the Tax Procedure Code.

4.  The ancillary liabilities related to the main tax liabilities administered by the central tax        body with maturities prior to August 31, 2024 inclusive and individualized in tax                    decisions issued as a result of a tax audit in progress on the date of entry into force of            the GEO, and concluded, according to art. 130 para. (4) of the Tax Procedure Code, shall           be annulled if the following conditions are cumulatively met:

a)  all the differences in the main tax liabilities individualized in the tax decision are cleared by any means provided by art. 22 of the Tax Procedure Code, until the payment deadline provided by law;

b)  the request for annulment of the accessories is submitted within 90 days from the communication of the tax decision, under penalty of forfeiture.

A tax audit in progress on the date of entry into force of the GEO is understood to be a tax audit for which the tax decision has not been communicated to the audited person by the date of entry into force of the GEO.

In the case of tax audits that are to start after the date of entry into force of the GEO, for the purpose of granting the annulment (the accessories related to the differences in main tax liabilities additionally declared by corrective declaration), the tax authorities take into account the corrective declarations submitted by debtors within 10 days from the date of entry into force of the GEO. Also during this period, the tax authorities notify the debtors of the existence of a documentary verification in progress.

5.  The ancillary liabilities related to the outstanding budget liabilities as  of August 31, 2024, including due to local budgets, may be annuled according to the GEO, optionally, provided that the application of these provisions is established by decision of the local council. By the same decision, the local council also approves the procedure for granting the annulment of accessories in compliance with the provisions of the GEO. The application of the provisions of the GEO is made by the administrative-territorial units.

6.  The ancillary liabilities related to the budgetary liabilities administered by other institutions or public authorities are annuled according to the GEO, the provisions regarding the conditions and procedure being applied accordingly. In this case, the request for annulment of the accessories shall be submitted and resolved by the public body or authority that administers the respective tax liabilities. These provisions also apply to the stamp for historical monuments regulated by art. 51 of Law 422/2001 on the protection of historical monuments.

7.  In the case of debtors who, on 25 November 2024 inclusive, have reimbursement requests pending for which, after this date, the tax authority totally or partially rejects the reimbursement, they benefit from the annulment of the ancillary tax liabilities if they pay the tax liabilities on which the annulment depends, not paid by offsetting with the amounts individualized in the reimbursement request, within 30 days from the date of communication of the decision rejecting the refund.

8.  The GEO provides some additional facilities for  debtors, natural persons, as follows:

• debtors who have outstanding main payment liabilities on August 31, 2024 inclusive in an amount of less than RON 5,000 inclusive may benefit from (i) the annulment of 50% of the main tax liabilities, outstanding on August 31, 2024 inclusive, if they are extinguished by 50% by the date of submission of the annulment request,  but no later than November 25, 2024 and (ii) the annulment of interest, penalties and all accessories related to the main tax liabilities, outstanding on August 31, 2024 inclusive, if the previous condition is met.

• debtors who have outstanding main payment liabilities on 31 August 2024 inclusive in an amount greater than RON 5,000, may benefit from (i) the annulment of 25% of the main tax liabilities, outstanding on 31 August 2024 inclusive, in the event that they are extinguished by 75% by the date of submission of the annulment request,  but no later than November 25, 2024 and (i) the annulment of interest, penalties and all accessories related to the main tax liabilities, outstanding on August 31, 2024 inclusive, if the previous condition is met.

In this case, the conditions mentioned in the previous sections apply accordingly (except for those relating to maturities prior to 31 August 2024 and individualised in tax rulings following a tax audit).

9.  Also, debtors who, on the date of entry into force of the GEO, benefit from  the rescheduling of payments of tax liabilities according to the Tax Procedure Code, as well as those who obtain the rescheduling in the period between the date of entry into force of the GEO and November 25, 2024 inclusive, may benefit from the annulment of interest, penalties and all accessories under the conditions mentioned in section III above,  paragraphs 2 to 4 and 8.

IV. Procedure for the annulment of ancillary liabilities

Debtors who intend to benefit from the annulment of ancillary tax liabilities may send a notification to the tax authority regarding their intention, no later than the date of submission of the request for annulment of accessories, but no later than November 25, 2024, under penalty to lose such right.

After receiving the notification, the tax authority verifies whether the debtor has fulfilled its declarative obligations according to the tax vector by the date of submission of the notification, performs the clearance, offsetting and any other operations necessary in order to establish with certainty the tax liabilities that represent a condition for granting the tax facility. If it is found that the debtor has not fulfilled its declarative obligations, the tax authority guides the debtor according to art. 7 paragraph (2) of the Tax Procedure Code.

Within 5 working days from the date of submission of the notification, the tax authority shall issue ex officio the tax attestation certificate, which it shall communicate to the debtor.

The tax authority has the obligation to clarify with the debtor any inconsistencies regarding the tax liabilities that are a condition for granting the tax facility or those that can be annuled according to the GEO.

For debtors who have notified the tax authority:

a)  interest, penalties and all accessories, which may be subject to annulment, shall be deferred to payment in view of the annulment;

b)  the forced execution procedure does not start or is suspended;

c)  the ancillary tax liabilities deferred to payment shall not be cleared until the date of settlement of the request for annulment of the accessories or until November 25, 2024 inclusive, if the debtor does not submit a request for annulment of the accessories;

d)  in the case of debtors who are natural persons, including those who carry out economic activities independently or exercise free professions, the tax authority shall also issue a decision to postpone a percentage of 50%, respectively 25%, as the case may be, of the main tax liabilities outstanding on 31 August 2024 inclusive.

The decision to postpone the payment of interest, penalties and all accessories loses its validity if the conditions provided by law for obtaining the annulment are not met.

For debtors who have not notified the tax authority in accordance with the above, interest, penalties and all accessories that can be annuled according to the GEO and which have been cleared after the date of entry into force of the GEO shall be refunded according to the Tax Procedure Code.

In addition, the tax facility representing the annulment of accessories provided for by the GEO maintains its validity also in the following cases:

• in case of the definitive annulement of the tax  administrative deed in the procedure for settlement of the tax appeal, as well as in the judicial procedure, if a the issuance of a new tax administrative deed was ordered;

• if, after the issuance of the tax certificate, the tax authority finds that there are certain tax liabilities that were not included in the tax certificate.

According to the provisions of the GEO, the detailed application procedure is approved by order of the Minister of Finance, within a maximum of 15 days from the date of entry into force of the GEO. In the case of tax liabilities administered by other public institutions or authorities, except for the administrative-territorial units and administrative-territorial subdivisions of the municipality of Bucharest, the procedure to be applied for the annulment of the accessories is approved by the head of the public institution or authority, with the approval of the Ministry of Finance, within a maximum of 15 days from the date of entry into force of the GEO.

B. BONUSES GRANTED TO GOOD PAYERS 

Apart from the facility regarding the annulment of certain tax liabilities, the GEO also provides for the possibility of granting a bonus of 3% of the amounts of corporate income tax / micro-enterprise income tax paid by good taxpayers, under certain conditions.

I. Who can benefit from the bonus

Taxpayers paying corporate income tax, regardless of the declaration and payment system provided for in art. 41 of the Tax Code, as well as taxpayers paying microenterprise income tax according to Title III "Microenterprise income tax" of the Tax Code, benefit from a 3% bonus from the annual corporate income tax and from the microenterprise income tax, related to the tax year 2024/modified tax year starting in 2024, as the case may be.

In case of the tax group, the bonus is applied to the annual corporate income tax declared by the responsible legal entity.

The provisions of the GEO also apply if, at the end of the tax year 2024/amended tax year starting in 2024, taxpayers owe profit tax at the level of the minimum turnover tax, according to art. 181 of the Tax Code.

II. Conditions for granting the bonus

The bonus is granted by the tax authority in compliance with the following conditions:

a)  the taxpayer has submitted all the statements according to the tax vector;

b)  the annual corporate income tax/microenterprise income tax for the year 2024/amended tax year beginning in 2024, as the case may be, shall be fully paid and within the deadlines provided for by law;

c)  the taxpayer does not register any other outstanding tax/budgetary obligation at the legal deadline for submitting the declarations declaring the annual corporate income tax for the year 2024/amended fiscal year starting in 2024, respectively declaring the microenterprise income tax for the fourth quarter of the fiscal year 2024, according to the law.

III.  Procedure for granting the bonus

The central tax authority ascertains ex officio the fulfillment of the conditions for granting the bonuses by issuing a decision, as follows:

a)  in the case of taxpayers paying corporate income tax, after the expiry of the deadline for submitting the annual corporate income tax return, according to the law, related to the tax year 2024/modified tax year starting in 2024, as the case may be;

b)  in the case of taxpayers paying microenterprise income tax, after the expiry of the deadline for submitting the microenterprise income tax return for the fourth quarter of the fiscal year 2024, according to the law.

The amounts subject to the bonus are not refunded, but are used to offset the taxpayer's tax liabilities in accordance with the provisions of Article 167 of the Tax Procedure Code. By exception, the tax liabilities subject to the bonus, for which the limitation period of the right to request the refund is fulfilled, shall be refunded according to art. 168 of the Tax Procedure Code, if they have not been offset with other tax liabilities.

CONCLUSIONS

The GEO establishes both the possibility for debtors to benefit from the annulment of tax liabilities, as well as the granting of a bonus of 3% of the tax due for taxpayers who pay the amounts due in full and on time. Also, the GEO provides the conditions that they must meet and the general procedure to be followed by both debtors and tax authorities, the special procedure being approved by order in the following period.

We invite you to contact our consultants with confidence in order to obtain more information on the provisions of this normative act, as well as its applicability for your business.

We can also support you with a personalized point of view on the conditions to be fulfilled and the steps to follow in order to benefit from the tax amnesty according to the GEO (either for you, or for the Company you represent or for the employees of the company where you operate).