Newsletter 11/2019 – Tax relief measures  

In the Official Gazette no. 784/26.09.2019 was published the Emergency Ordinance 67/2019 for amending the Government Ordinance 6/2019 regarding the granting of certain tax facilities for the debtors with tax liabilities outstanding at 31.12.2018, published in the Official Gazette no. 648/05.08.2019. The norms for applying the measures established by this Ordinance were approved by the Order of the Minister of Finance no. 2810/2019, published in the Official Gazette no. 711/29.08.2019, respectively by the Order of the Minister of Finance no. 3126/2019, published in the Official Gazette no. 786/27.09.2019.

 

We present below the main amendments brought to the tax legislation by the normative acts mentioned above

 

 

Measures for restructuring the main budgetary obligations outstanding at 31.12.2018 in the amount of over 1 million lei

 

Applicability

 

The possibility of restructuring the main tax liabilities in the amount of over 1 million lei, outstanding at 31.12.2018 and which have not been paid yet, as well as of their accessory liabilities (interest, penalties), is established. The amounts that may be subject to restructuring are those mentioned in the tax clearance certificate issued by the tax authorities for this purpose.

 

The debtors who may benefit from the restructuring of the tax liabilities must meet cumulatively the following conditions:

• to submit a restructuring plan and a prudent private creditor test., drawn up by an independent expert;
• to not be in the insolvency proceedings;
• to not be in the situation of benefiting from the debt payment rescheduling, as regulated by the Fiscal Procedure Code;
• to have all tax returns submitted.

Measures of restructuring the tax liabilities

The tax debt restructuring is made by one or more measures, respectively:

• debt payment rescheduling for a period of maximum 7 years, as well as the postponement of the accessory liabilities, in order to be canceled;
• the postponement of payment of a part of maximum 50% of the main obligations, in order to be canceled
• transfer in lieu of payment of real estate;
• conversion into share capital of the main budgetary obligations.

Procedure to benefit from the restructuring facility

 

Debtors wishing to benefit from this restructuring facility must notify the tax authorities no later than 31 October 2019.

 

Subsequently, after the restructuring plan and the prudent private creditor test have been drawn up by the independent expert, the debtor has to submit them to the tax authorities together with the formal restructuring request. The maximum deadline for submitting the application is 6 months from the entry into force of the ordinance, respectively 8 February 2020.

 

The restructuring plan must present the patrimonial situation of the debtor and the causes of the financial difficulties, as well as the restructuring measures by which the debtor intends to overcome the financial difficulties.

 

The debtors who request through the restructuring plan the cancellation of a part of the main obligations must pay a certain percentage of the outstanding amounts until the submission of the restructuring request, as follows:

• in case of requesting the cancellation of 30% of the main obligations, must pay 5% of the total tax liabilities that are subject to easing;
• in case of requesting the cancellation of an amount between 30% and 40%, must pay 10% of the total tax liabilities that are subject to easing;
• in the case of requesting the cancellation of an amount between 40% and 50%, must pay 15% of the total tax liabilities that are subject to easing.

Moreover, by the date of submission of the restructuring request, the debtor must pay any outstanding tax liabilities due in 2019, as well.

Running restructuring plan

 

If, after verifying the submitted documentation, the tax authorities ascertain the fulfillment of the conditions, the decision approving the restructuring of the tax liabilities will be issued. This will be accompanied by the payment schedule of the monthly rates and the decisions to postpone the payment of the accessories and main tax liabilities, in order to cancel them.

 

Throughout the implementation of the restructuring measures, each debtor will be monitored and supervised by a person appointed by the tax authority. The respective person is entitled to attend general shareholders meetings or management meetings, to have access to all the documents of the debtor, as well as to have access to all the locations where the debtor carries out his activity.

 

Additionally, the independent expert has the obligation to permanently monitor the implementation of the measures in the restructuring plan, preparing a report on a quarterly basis that must be provided to both the debtor and the tax authority.

 

Initiation of insolvency proceedings

 

The tax authority has the obligation to request the initiation of the insolvency procedure upon the debtors with outstanding obligations at 31.12.2018 in the amount of over 1 million lei, which is in one of the following situations:

• do not submit the request for restructuring within the deadline;
• the request for restructuring is rejected by the tax authorities;
• during the running of the restructuring plan, the debtor does not comply with the measures envisaged.

 

Annulment of accessory liabilities for debtors with main budgetary obligations under 1 million lei outstanding at 31.12.2018

 

Applicability

 

The possibility to benefit from the annulment of the accessory liabilities (interest, penalties) for the debtors who, as of 31.12.2018, have outstanding tax liabilities in amount under 1 million lei, is established. The amounts that can be subject to annulment are those mentioned in the tax clearance certificate issued by the tax authorities for this purpose.

 

Procedure to benefit from the annulment of the accessory tax liabilities

 

The debtors who intend to benefit from the annulment of the accessory tax liabilities must submit a request to the competent tax authority by 16.12.2019.

 

Furthermore, by the same date, the main tax liabilities overdue as of 31.12.2018 must be paid, as well as any additional tax liabilities and unpaid accessory tax liabilities, due in 2019.

 

In case of accessory tax liabilities imposed under tax assessment decisions issued as part of tax inspection in progress at the date of entry into force of the ordinance (i.e., 08.08.2019), the debtors can benefit from the annulment of the accessory tax liabilities if all the additional main tax liabilities are settled, as per the tax assessment decisions. In this case, the application for annulment of the accessory liabilities must be submitted within 90 days from the communication of the tax assessment decision.

 

If, after verifying the submitted documentation, all the requirements are fulfilled, the tax authority will issue the decision for the annulment of the accessory tax liabilities.

 

 

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