According to an announcement published on 8 May, the Romanian Government has approved the fiscal amnesty measures proposed by the Ministry of Public Finances, applicable to the interests, penalties and other accessories due by tax payers which pay the principal of the outstanding debts until 15 December 2020.

The fiscal amnesty aims to support relaunching the economy and to help tax payers overcoming economic difficulties, by reducing their tax burden.

By implementing the amnesty the Government aims also to optimize the collection of budgetary debts outstanding on 31 March 2020, as well as of budgetary debts payable between 1 April 2020 and 15 December 2020, in the sense that, the cancellation of accessories will allow tax payers to use the available liquidities to carry on their business operations impacted by the Covid-19 pandemic and will facilitate cleaning  debts off the balance sheets.

The newly envisaged measures are expected to generate an estimated RON 2 billion increase in the collection of budgetary revenues.

The fiscal incentives are targeted towards tax payers registering outstanding debts on 31 March 2020, such as individuals, legal entities, freelancers and natural persons performing liberal professions, entities without a legal personality, public institutions, etc., and include 4 types of fiscal incentives, as follows:

1.     Cancellation of interests, penalties and other accessories related to principal amounts outstanding until 31 March 2020 inclusively, in case of tax payers registering both outstanding accessories and outstanding principal

To benefit of this measure, tax payers must pay the total principal outstanding on 31 March 2020, pay the current debts (those born after 31 March 2020), file all tax returns as well as the request for cancellation of accessories until 15 December 2020.

In other words, on the date of filing the request for cancellation of accessories, the tax payer must have paid all budgetary debts, other than the accessories.

2.     Cancellation of supplementary interests, penalties and other accessories related to principal amounts, declared by tax payers via corrective tax returns, falling due until 31 March 2020 inclusively

In this scenario, tax payers noticing that the amounts declared initially are erroneous may file corrective tax returns to declare the supplementary amounts due and may benefit of cancellation of accessories related to these amounts if they pay the additional amounts as well as current debts (those born after 31 March 2020), file all tax returns as well as the request for cancellation of accessories until 15 December 2020.

3.     Cancellation of interests, penalties and other accessories related to principal amounts outstanding until 31 March 2020 inclusively, in case of tax payers registering only accessories (all principal debts being paid)

In this case, to benefit of the cancellation of accessories, tax payers must pay their current debts (born after 31 March 2020), file all tax returns as well as the request for cancellation of accessories until 15 December 2020.

4.     Cancellation of interests, penalties and other accessories related to principal amounts outstanding until 31 March 2020 inclusively, established by a taxation decision issued following a tax audit or verification of personal tax situation of individuals, which is ongoing on the date of entry into force of the government emergency ordinance

In this case, tax payers which, on the date of entry into force of the GEO, are subject to an ongoing tax audit or verification of the personal tax situation of individuals may benefit of the cancellation of accessories related to the supplementary obligations established by the tax auditors if they pay these obligation within the payment deadlines established by the taxation decision and if they file the request for the cancellation of accessories within 90 days from the date the decision is communicated, irrespective if the audit was finalized until 15 December 2020 or after such date.

According to the Ministry of Public Finances’ press release, these fiscal incentives may be implemented also by the local public authorities, at their discretion, in case local councils approve by decision the application and the applicable procedures regarding such measures.

The fiscal incentives will be applied also by other public authorities or institutions managing budgetary obligations, in the sense that these entities must also cancel the accessories of budgetary principal amounts managed by the former, if the conditions provided in the emergency ordinance are fulfilled.

Tax payers may notify the tax authorities of their desire to benefit of the cancellation of accessories, in which case the relevant accessories will be subject to a special management regime. In case of tax payers which have not notified the tax authorities in view to benefit of the cancellation of accessories, the interests, penalties and all accessories which may be cancelled and which have been paid after the entry into force of the GEO may be reimbursed, upon request, in accordance with the Fiscal Procedure Code.

Tax payers subject to garnishment measures on the date of entry into force of the government emergency ordinance will be granted the possibility to use the garnished amounts to make payments in view to benefit of the cancellation of accessories measures above.

Tax payers may benefit of the cancellation of accessories under any and each of the fiscal incentives mentioned above, assuming they fulfill the conditions to benefit of any and each of such incentives.

Tax payers which benefit, on the date of entry into force of the GEO, of payment scheduling measures, may benefit also of the above fiscal incentives if (1) they fulfill the conditions provided by the GEO; and (2) wish to maintain the payment scheduling or they finalized the scheduled payments by 15 December 2020.

It is noteworthy that the newly announced fiscal incentives are in addition to, and supplement other fiscal measures enacted by the Government and currently in force, such as the following:

a)    Government Emergency Ordinance no. 29/2020 on certain economic and fiscal-budgetary measures, which enacted measures applicable during the state of emergency and for a 30-day subsequent period, in view to addressing existing difficulties, including among others:

-        measures to suspend or prevent the initiation of forced execution by garnishment of budgetary debts;

-        waiving the right to interests and penalties related to fiscal debts falling due as of 21 March 2020 and unpaid within 30 days after the end of the state of emergency;

-        postponement until 31 June 2020of the payment deadline for the first installment of the tax on property (real estate, transportation means);

-        computing the 2020 profit tax anticipated quarterly amounts at the level of amounts resulting from the profit tax computation related to the current quarter;

-        postponing the deadlines for filing the intention and, respectively, the request to restructuring budgetary debts under Government Ordinance no. 6/2019 on establishment of certain fiscal incentives.

b)    Government Ordinance no. 6/2019 on the establishment of certain fiscal incentives, which enacted measures aimed at stimulating the voluntary payment of fiscal, including the restructuring of budgetary debts outstanding on 31 December 2018 and unpaid by tax payers until the issuance of the tax ascertaining certificate, including accessories.

Following the amendment, in February 2020, of the GO no. 6/2019 by GO no. 6/2020, the restructuring measures above were made available to all tax payers (legal entities) registering budgetary debts outstanding on 31 December 2018, subject to fulfilling the legal requirements. Before such amendment, the restructuring measures were available only for tax payers registering budgetary debts outstanding on 31 December 2018 of at least 1 million RON.

Furthermore, following the amendment of Government Ordinance no. 6/2019 by GEO no. 29/2020, the deadline for filing the intention to restructuring budgetary debts was extended until 31 July 2020 and, respectively, the deadline for filing the request for restructuring budgetary debts, was extended until 31 October 2020.