In the Official Gazette of Romania no. 585/28.06.2023 published Order No. 920/13.06.2023 of the National Agency for Fiscal Administration regarding individuals with large assets, which regulates several aspects regarding the compliance and control of large assets, which means strengthening ANAF’s efforts to collect, in full and on time, as as much revenue as possible to the state budget.

Order number. 920/13.06.2023 in particular regulates the following: definition of individuals with large assets; method of establishing/assessing wealth; definition of PFAM groups, extended PFAM; determination of the competent structure for the implementation of the program of increasing the voluntary payment of taxes by individuals with large assets (GDUFD).

Thus, a high net worth individual is defined as an individual tax resident in Romania who owns wealth, both domestically and abroad, worth more than 25 million euros, equivalent in lei, calculated at the average exchange rate of the euro for the year before wealth assessment established by the National Bank of Romania.

Regarding the value of assets, Order No. 920/13/06/2023 provides clarity, providing that their assessment will be based on data and information regarding real estate, movable property and financial assets owned, while wealth is considered the sum of the three elements.

At the same time, the concepts of the group of wealthy persons and the extended group of wealthy persons are also regulated as follows:

• The term “High net worth group” refers to individuals whose estimated assets exceed EUR 25 million.

• The concept of the extended group of high-net-worth individuals refers to the group of high-net-worth individuals to which are added individuals from spouses and relatives up to the second degree of his/her.

Taxpayers who are part of the High Wealth Group and/or the Extended High Wealth Group should be informed that they are part of such a group by means of a notice that will contain more information about the inclusion in the wealth criteria, the three elements against which wealth was measured, and legal aspects of compliance. Currently, fiscal risk individuals are notified by tax authorities for compliance purposes if they identify significant differences between taxpayers’ declared income and the income they estimate based on certain fiscal and property indicators. The notification of compliance is a procedural step before the start of the tax audit (but after the risk analysis).

In addition, the group of high net worth individuals as well as the extended group of high net worth individuals are updated every 3 years to include individual taxpayers with an estimated net worth of more than €25 million and once every 6 years in the sense exclusion of individual taxpayers whose assets have fallen below the above-mentioned threshold.

To ensure tax compliance, alternative tax regimes will be applied to increase tax compliance – encouraging high net worth individuals to understand and declare, and sending notifications of identified non-compliance issues. At the same time, ANAF will continue to screen, based on risk analysis, individuals who pose a risk of non-compliance with the declaration of taxable income for personal financial status checks/documentary checks.

The main aspects to be remembered in the ANAF draft order are related to increasing the level of compliance with the requirements of declaring large assets and, accordingly, paying the corresponding taxes and developing, also in Romania, “partnership relations”. between taxpayers and the tax authority in order to avoid unpleasant and difficult situations when, as a result of inspections, irregularities in declaration and payment are revealed.

Thus, ANAF intends to work to support voluntary tax compliance by high-net-worth taxpayers using all available measures, including through segmentation of taxpayers based on fiscal risk, control actions preceded by targeted pre-actions, guidance and notifications on identified problems of non-compliance.

For their part, taxpayers in this category must thoroughly analyze the legislation, correctly and fully assess the total wealth, declare their income and pay the relevant taxes in accordance with the provisions of the Fiscal Code, usually by May 25 of each year. year for the previous year. There are complex situations in which the income can be received both in Romania and abroad, the assets are of different types, even from each of the three categories mentioned above, and a specialized fiscal analysis is required.

In summary, ANAF aims to create the necessary preconditions for compliance, fairness, transparency in the declaration of income in general and the necessary cooperation between taxpayers with large assets and authorities. Regarding what ANAF intends to define as “large assets” and taking into account the necessary valuation of movable property, real estate and financial assets, paying increased attention also to companies whose shareholders are the relevant taxpayers, specialized assistance, both fiscal and legal, is necessary precisely to avoid situations of complete inconsistency.

According to the report on the activities of the National Tax Agency for 2022, based on the results of audits of taxpayers of legal entities and individuals in 2022, the fiscal inspectorate recorded the following results:

– 34,991 audits of tax payers of legal entities and individuals (26,056 – legal entities and 8,935 – individuals) were conducted, including 24,459 tax audits (17,411 – legal entities and 7,048 – individuals);

– additional amounts totaling 2,806.1 million lei were established (2,629.5 million lei for corporate taxpayers and 176.6 million lei for individual taxpayers).

Also, in the first three months of 2023, 14,160 inspections of legal entities and individuals were conducted – 10,184 legal entity taxpayers and 3,976 individual taxpayers, with additional amounts determined for a total of 612.0 million lei.

The article is signed by Corina Minda, Partner, Income Tax and Social Contributions, EY Romania and Kelin Sten, Associate, Senior Managing Associate, Bank, Deacon & Partners

Article supported by EY Romania