​A tax act that imposed additional fiscal liabilities as a result of ANAF’s denial of the right to deduct certain expenses has been overturned by the Directorate General of Appeals (DGSC) of the Ministry of Finance. This ruling, issued to resolve a tax appeal with the support of a team consisting of D&B lawyers David C. Bayas and PwC consultants in Romania, is of particular importance, as we believe that the company will be able to successfully apply it during the tax audit. the procedure for emphasizing the need for their development, starting with those established by the settlement authority.

In this case, the taxpayer was subject to an income tax audit. In this regard, the tax inspection bodies refused to deduct part of the expenses with a series of services purchased in the group, as well as part of the expenses with depreciation of some fixed assets, establishing the company’s responsibility for the difference in additional tax liabilities of more than 12 million lei.

The conclusions of the tax inspection group were based, on the one hand, on the alleged lack of a sufficient documentary base to confirm the provision of relevant services and, on the other hand, on the denial of the deduction of some amortization costs, although the company presented final court decisions in similar cases decided against other entities groups with identical economic activity that confirmed the tax regime applied by the taxpayer.

The taxpayer filed a tax complaint for additional taxation, which the DGSC recognized and ordered to resume the tax audit, providing in the reasoning of the decision a number of very clear instructions for the new group of the tax inspection as to the need for a more thorough analysis of the documentary support, as well as checking the relevance and relevance of court decisions in the analyzed operations

The restoration of the tax inspection took place, however, without a new group of the tax inspection according to the settlement decision. Practically, the new imposition carried out by the tax inspection group was based on the same conclusions that were included in the first act of control and which, thus, were recognized as invalid by the State Tax Administration during the decision of the first tax appeal.

Thus, the main criticism of the administrative method of attack in the second administrative cycle was based on the illegal approach of the new group of the tax inspectorate, which ignored the mandatory conclusions and conclusions of the body that settles the issues contained in the settlement act regarding the need to carry out a qualitative analysis of all supporting documents, provided by the taxpayer, according to the corresponding number of court decisions referred to by the taxpayer.

The new tax complaint, which was advertised by the company, implied the issuance of a tax act in gross violation of the provisions of Art. 129 and Art. 279 of Law No. 207/2015 on the Tax Procedure Code with the following amendments and additions, for which, in accordance with the provisions of Art. 49 par. (1) lit. e) from the same normative act it was required to cancel the imposition carried out without taking into account the settlement act.

The DGSC affirmed the company’s position and reversed the application decision issued as a result of the re-examination, applying the sanctions provided for in these legal provisions, reaching a fair and legal conclusion that the review panel did not take into account the findings of the settlement act, nor did it specifically show why they would not be related to the restitution procedure. Thus, the decision-making body came to the conclusion that such an approach violates the will of the legislator, as it is directly provided for in Art. 129 and Art. 279 of the Fiscal-Procedural Code and justifies the complete cancellation of such imposition.

We understand that the decision of the DGSC is strict and fair, which is in line with the spirit and letter of the tax procedural law, which introduced the invalidity sanction precisely to prevent a situation where a taxpayer ends up being taxed twice on the basis of findings that have already been condemned as illegal . We believe that in this way it would be possible to revive the institution of revalidation and its transformation from a rather rudimentary and simplified procedure, which is limited to copying some previous conclusions, to a true form of verification of the key elements of the dispute. between tax authorities and taxpayers regarding the facts in question and applicable tax legislation.

The team of D&B David si Baias and PwC Romania that participated in the development of this solution consisted of Mihail Boyan, associate lawyer, Cristina Fuyoaga, director, Ana Maria Vasile, senior lawyer and Gabriel Gheorghe, senior consultant.

Article supported by PwC Romania