Proposal of amendments to the Fiscal Procedure Code referring to resolution of tax litigations

An article written by Octavian Marian, Associate

On 26th of July 2019 and 14th of August 2019, the Ministry of Public Finances presented for public debate, two projects of Ordinances to modify and to supplement Law no. 207/2015 on the Fiscal Procedure Code.

Thus, within the first Ordinance project, the Ministry of Public Finances proposed the implementation into the Romanian legislation the provisions of the Directive (EU) 2017/1852 of 10th of October 2017 on tax dispute resolution mechanism in the European Union, and through the second Ordinance project, substantial changes are made on the fiscal procedure rules.

Regarding the first Ordinance project, namely the transposition of the Directive 1852, it needs to be mentioned that Romania had an obligation to ensure the implementation of these regulations as of 30th of June 2019.

Naturally, in the same manner as the objective of the Directive, the first Ordinance project seeks to provide a legal framework for the taxpayers and the tax authorities, in order to remove different interpretations or ways of applying of the provisions of the bilateral tax treaties that provide for the elimination of double taxation. In this respect, by transposing the provisions of the Directive into the national law, the Romanian tax authorities will be able to use the mechanism together with other Member States, in order to avoid double taxation of income.

In brief, based on these new provisions, a taxpayer who finds himself in a position of double taxation, can notify both the Romanian authorities and the authorities of the Member State involved, in order to clarify the issue. From the moment of the notification, a complex “negotiation” procedure is initiated between the representatives of the Romanian authorities and the representatives of the involved Member States.

It must be said that the initiation of this procedure does not prevent the taxpayer from using other legal remedies against the tax decisions, respectively to file an administrative claim before the competent tax authorities and subsequently to lodge a claim before the court.

Regarding the second ordinance project, namely the amendments on the fiscal procedure code, it includes a substantial number of amendments (no more than 95 articles of the law), by introducing new articles and by modifying the present ones.

In addition to the proposed changes which are related to the technical side of the tax procedure and the compliance with the new rules on the processing of personal data, the Romanian authorities also intend to rearrange the administrative tax system.

Therefore, the definition of the “central fiscal authority” is amended, and besides the National Agency for Fiscal Administration (“NAFA”), as the central fiscal authority, the Ministry of Public Finance is introduced. In addition, the Ordinance project, provides that starting with 1st of January 2020, the Ministry of Public Finance will take over from NAFA: the General Directorate for the Administration of Large Taxpayers and the regional general directions of public finances, the activity of solving the administrative appeals filed against the debt securities, as well as of other fiscal administrative documents issued by the central fiscal body, and all the related personnel.

Also, it should be mentioned that, in the view of the Romanian authorities, the amendments proposed through the Ordinance project are favourable to the domestic business environment because they aim to improve the relationship between the taxpayers and the tax authorities, to simplify the tax procedures, and to give a better clarity of the law, eliminating non-unitary interpretations either from tax authorities or from the taxpayers.

Analyzing the amendments, we can say that it could have a positive impact, since they come, on the one hand, to transpose a part of the case-law, and on the other hand, they represent a remedy in the interpretation of the legal provisions, which did not provide sufficient clarity and were the subject of disputes between the tax authorities and taxpayers.

In this regards, the Romanian authorities propose to introduce the possibility of the tax authorities to review the decision issued in the administrative procedure of settlement of claims, in case High Court of Justice and Justice of Romania issues a decision in the interest of the law which is relevant in the case. Also, the review of this kind of administrative decisions can be made if, before or after the issuance, the Court of Justice of the European Union, releases a decision contrary to the interpretation of the tax authorities.

The amendments also contain aspects which clarify the nullity causes of the tax decisions, but also issues related to the payment scheduling procedures or the possibility of the taxpayer to claim interest from the Romanian authorities.

Last but not least, the amendments also aim to rethink the system of solving administrative appeals against the tax decisions. In this regard, the body for solving these appeals passes from NAFA to the Ministry of Public Finance. This amendment should give a higher degree of impartiality to the decisions issued in the resolution of the administrative claims against the tax decisions.

The article can be downloaded in PDF format right from this link.

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