​The compliance notice regulated by GEO 188/2022, which amended the Fiscal Procedure Code, is an important step to encourage voluntary compliance when paying taxes and fees. The authorities have also recently proposed the necessary by-laws detailing the situations in which taxpayers can receive such a notification, but specifically the exceptions, respectively, the cases where the tax authorities can start an audit or review of the physical tax situation, even if they have not issued a previous notification about compliance.

Under legislation passed late last year, the notice will be sent to taxpayers prior to their election for a tax audit or an audit of the tax situation of individuals and will contain the tax risks identified for the taxpayer so that he has the opportunity to re-analyze and correct his tax situation within 30 days from the moment of notification. During this period, the taxpayer can be sure that he will not be audited. After 30 days, if the fiscal risks mentioned in the notice persist, the fiscal authority may initiate a fiscal audit or an audit of the personal financial situation. Taxpayers with a high fiscal risk who have not eliminated the fiscal risks they were informed about are subject to either a tax audit/audit of the tax status of the person or a documentary audit.

The name of this new procedure in itself indicates an attempt to change the paradigm – if before GEO 188 the taxpayer chosen to verify or verify the tax situation of an individual did not have the opportunity to clarify unclear aspects in advance, and thus avoid the initiation of control, in the future the legislator wants to encourage voluntary compliance by taxpayers in the sense of correcting the tax regime, which is applied outside the procedure of administrative control, in accordance with the international practice of modern tax administrations.

This change in approach was also mentioned by representatives of the National Agency for Fiscal Administration (ANAF) – Daniela Teodoru, Director General, Directorate General for Coordination of Fiscal Control, and Sia Girou, Director, Directorate General for Coordination of Fiscal Control, during an event organized by Deloitte, it is welcome in a context in which Romania faces a more pronounced gap in the collection of fees and taxes compared to other European states.

Expected benefits of compliance notification

The practical application of the provision should create advantages for both sides of fiscal legal relations. From the point of view of the taxpayer, the main advantage is that, thanks to voluntary compliance and early elimination of risks, he can demonstrate to the tax authority that there is no longer any reason to start a tax audit or check the tax situation of individuals. In this way, the human and financial resources that were allocated in the past to the often time-consuming control management can be used more efficiently in the future.

In addition, even if the taxpayer believes that the fiscal risk reported by ANAF in the notification has not been verified in reality or does not coincide with its own interpretation, and therefore decides not to take any steps to reassess its fiscal position, he will benefit for a period of 30 days from the date of notification during which ANAF will not be able to initiate control action. This “grazing” can be used pragmatically, in the sense that it can be used to prepare fiscal control actions.

From the point of view of ANAF, the advantages of the new procedure are both the simplification of fees and taxes to the state budget, as well as a more efficient allocation of human resources, while tax inspectors will devote themselves exclusively to those control actions that deal with permanent fiscal risks.

Next comes the efficiency check

Recently released draft orders for the approval of by-laws contain clarifications regarding situations in which a notice of non-compliance is sent, in particular, is not sent to a taxpayer before selection for a tax audit or verification of a person’s tax situation.

According to the documents, the notification will be issued whenever the risk analysis reveals new fiscal risks that were not previously reported and were not subject to fiscal control.

On the other hand, the notification will not be sent if: the tax audit is necessary to resolve some of the taxpayer’s requests, the tax audit is expressly provided for by other regulatory acts, or there is a danger that the taxpayer/taxpayer will evade the tax audit. There are also other cases when the supervisory body does not provide a notification before the start of the tax audit, respectively – does not report the conclusion of the tax inspection. Among such situations, which are often encountered in practice, one can name a repeated tax audit or a preliminary unexpected audit, after which it is necessary to start a tax audit immediately. Exceptions to the transmission of the message are similar in the case of verification of personal financial situation.

So, taxpayers should keep in mind that there may be situations when they will not receive notification that they are eligible for the selectionfor a tax audit or physical tax audit, these are important exceptions to the rule. Thus, after the completion and entry into force of the specified provisions, taxpayers can expect to receive notifications of compliance from ANAF, but should also take into account the possibility of starting a tax audit or checking the physical tax situation without receiving such a notification (in cases specified by law) and , thus not taking advantage of the benefits mentioned earlier.

In summary, it remains to be seen whether this new procedure will in practice lead to avoidance of tax audits or audits of physical tax situations as a result of voluntary compliance by taxpayers. The result will depend, in particular, on how the tax authorities, as well as the payers themselves, will treat this message.

Reviews from Bohdan Markulec, Senior Associate and Stefan Mihertescu, Managing Associate, Referees and Associations | Deloitte Legal