Government Emergency Ordinance no. 181/2020 on some fiscal-budgetary measures and for amending and supplementing some normative acts

In brief

The Government of Romania has adopted a series of fiscal measures through Government Emergency Ordinance no. 181/2020 (GEO 181/2020), which entered into force on 26 October 2020, including:

• Until 25 December 2020, interest and penalties will not be considered outstanding, and interest will not be levied, on unpaid tax obligations with maturity on 21 March 2020. All enforcement measures are suspended or will not commence until that date. 

• Taxpayers can benefit from payment rescheduling, for a maximum of 12 months, for the principal fiscal obligations and unpaid accessories whose maturity / payment term were fulfilled after the date the state of emergency was declared;

• Taxpayers obliged to pay the specific tax for certain activities in 2020 are exempt from payment for the period 26 October 2020 - 31 December 2020;

• The legal deadline by which the VAT returns with negative amounts and reimbursement options are settled with subsequent inspection has been extended until 25 January 2021;

• Annual building tax payments can be reduced by up to 50% for non-residential buildings or exemptions granted from the payment of the monthly tax on buildings, for the year 2020, if decisions are adopted in that respect by local councils and the Municipality of Bucharest General Council by 2 December 2020.  

In detail

1. Scheduling for budgetary obligations due or with payment deadlines after the date the state of emergency was declared, as administered by the central fiscal body and not extinguished by the date of issuance of the fiscal attestation certificate

GEO 181/2020 gives debtors the possibility of benefitting from payment instalments, for a maximum period of 12 months, for the principal and ancillary fiscal obligations, as administered by the central fiscal body, whose maturity was fulfilled after the state of emergency was declared and which have not been extinguished by the date of issue of the tax attestation certificate.

 Necessary conditions

To benefit from the payment rescheduling, the debtor must cumulatively meet the following conditions:

• Submit an application to the fiscal body by 15 December 2020,  under the sanction of forfeiture of rescheduling right. Upon request, the debtor may attach the staggered schedule showing the value of the staggered rates;

• Not be in bankruptcy proceedings;

• Not be in dissolution;

• Not have outstanding fiscal obligations on the date the state of emergency was declared and not extinguished on the date of issuing the fiscal attestation certificate;

• Not have established the liability according to the legislation on insolvency and / or joint and several liability under the Fiscal Procedure Code. If the amount established according to the documents attracting liability has been paid, this condition is considered fulfilled;

• Have submitted all the required fiscal declarations under the fiscal record. This condition must be met on the date of issuance of the tax attestation certificate.

The debtor's request will be resolved within five working days as of the date of its registration, by a decision to reschedule the payment or to reject the request. As of the date of communication of the rescheduling decision, the enforcement procedure will not begin or will be suspended for the amounts subject to rescheduling, including the obligations provided for in art. 4 para. 1 lit. a) -c), e) -j) and l) of GEO 181/2020.

Ancillary tax liabilities during the instalment period

The principal and ancillary tax liabilities in taxation decisions issued as a result of tax inspections in progress on this Ordinance’s date of entry into force may be rescheduled if the debtor submits the application within 30 days as of the date of notification of the taxation decision, the period subject to the tax inspection or verification of the personal tax situation. If the debtor's application is accepted, the payment rescheduling decision will also include a rescheduling schedule setting out the amounts and terms of payment of rescheduling rates.

For staggered payment tax obligations, as of 26 December 2020, interest is due and calculated at 0.01% for each day of delay.

In the event of late payment of the instalment rate during the next payment term in the schedule, as well as for the differences of fiscal obligations marked and left unpaid after the settlement of the returns with negative amount of VAT with reimbursement option, a penalty of 5% is charged.

Maintaining and modifying the schedule

GEO 181/2020 provides for the possibility of maintaining the validity of a staggered loss due to non-compliance with legal conditions, in which case the debtor owes a penalty of 5% for the payments remaining from the staggered amounts representing principal tax obligations and / or ancillary payments of 0.02% for each day of delay, for the principal tax obligations remaining to be paid in instalments, as of the date of issuance of the rescheduling decision.

Taxpayers may request the modification of the payment rescheduling, during its validity period, and may submit a maximum of two requests to modify the payment rescheduling decision in order to include other tax obligations in the rescheduling.

By submitting a waiver request, debtors may waive the payment rescheduling for the period of its validity if they pay the remaining tax obligations.

Debtors who, at the date of submitting the request for payment rescheduling according to this ordinance, have ongoing payment rescheduling granted according to the Fiscal Procedure Code may benefit from payment facilities under GEO 181/2020.

The procedure for granting payment rescheduling by the central fiscal body will be approved by order of the president of the National Agency for Fiscal Administration (ANAF) within 15 days as of the date of entry into force of GEO 181/2020.

Extension of the terms at which the applicability of the fiscal facilities regarding the suspension/non-commencement of the forced execution ceases and the qualification as not being overdue nor bearing accessories to fiscal obligations due as of 21 March 2020

The deadline has been extended to 25 December 2020 until which no interest and late-payment penalties are levied for unpaid tax obligations whose maturity has expired since 21 March 2020. Such tax obligations are not considered overdue until 25 December 2020.

Until 25 December 2020, enforcement is suspended or the tax authorities will not start enforcement, giving debtors the opportunity to decide on access to tax facilities appropriate to their tax situation.

Deadline extended for settling VAT returns with reimbursement option and subsequent inspection

Deadline extended to 25 January 2021, including the term provided by art. XIII alin. 1 of GEO 48/2020, until which the provisions of art. XI of the same normative act (VAT refund with subsequent control) apply.

2. Other fiscal measures

Regarding the specific tax

In 2020, the taxpayers obliged to pay the tax specific to some activities according to Law no. 170/2016 does not owe specific tax for the period between 26 October 2020 and 31 December 2020 inclusive.

The specific tax for 2020 will be recalculated by dividing the annual specific tax by 365 and multiplying the resulting value by the number of days obtained by subtracting from 365:

• the period from 26 October 2020 to 31 December 2020 inclusive;

• the number of 90 calendar days provided in art. I of GEO no. 99/2020.

• the period in which taxpayers who apply the provisions of art. IX of GEO no. 48/2020 for the recalculation of the specific annual tax stopped their activity, totally or partially, as a result of the state of emergency.

Taxpayers who have filed the specific tax return for the first half of 2020 can apply the above provisions by submitting an amending return.

Building tax

In 2020, the local councils and the Municipality of Bucharest General Council may adopt decisions until 2 December 2020 regarding:

• Reduction, upon request, of the annual tax on buildings by up to 50%, for non-residential buildings used for economic activity, owned by individuals or legal persons, if during the state of emergency and / or alert their owners or users were obliged to cease entirely their economic activity or hold a certificate for emergency situations issued by the Ministry of Economy, Energy and Business Environment.

• An exemption has been introduced from the payment of the monthly building tax for building users obliged to interrupt their economic activity during the state of emergency and / or alert period.

Electronic fiscal cash registers

The application of fines of RON 8,000 to RON 10,000 has been suspended until 31 December 2020 for economic operators that have not connected cash registers to the ANAF IT system.

3  Modification and completion of some normative acts

Government Ordinance no. 6/2019 on the establishment of fiscal facilities has been amended, as follows:

• Debtors wishing to restructure their budgetary obligations have to notify the competent fiscal body of that intention during the periods 8 August - 31 October 2019, 1 February - 30 September 2020 and 1 November 2020 - 31 March 2021, under the sanction of forfeiture of the right to benefit from the restructuring of budgetary obligations. They are also obliged to have an independent expert draw up the restructuring plan and the prudent private creditor test.

• the restructuring request can be submitted until 30 June 2021, under the sanction of revocation.

Law no. 227/2015 regarding the Fiscal Code

• The cost of COVID-19 infection medical tests performed for the taxpayer in order to detect and prevent its spread, to ensure the business activity, individually or in a form of association, during the state of emergency/alert, constitutes tax deductible expenses.

• The expenses incurred by employers/payers for employee COVID-19 infection tests, at own initiative, in order to detect and prevent its spread, and ensure business activity continues, during the state of emergency and/or alert, for individuals with income from salaries or treated as such, are treated as non-taxable income. Such expenses are not included in the monthly basis for calculating compulsory social contributions.

Source: [Government Emergency Ordinance no. 181/2020 for regarding some fiscal-budgetary measures and for the modification and completion of some normative acts, published in the Official Gazette no. 988 of 26 October 2020]

The takeaway

• Until 25 December 2020, interest and penalties will not be considered outstanding, and interest will not be levied, on unpaid tax obligations with maturity on 21 March 2020. All enforcement measures are suspended or will not commence until that date. 

• Taxpayers may benefit from the payment instalment for a period of up to 12 months for principal and ancillary tax obligations, administered by the central tax authority, for which the due date / payment deadline was after the date the state of emergency was declared and which have not been paid by the date of issuance of the fiscal attestation certificate.

• The legal deadline by which the VAT returns with negative amounts and reimbursement options are settled with subsequent inspection has been extended until 25 January 2021.

• Taxpayers obliged to pay the specific tax for certain activities in 2020 are exempt from payment for the period 26 October 2020 - 31 December 2020.

• Expenses incurred by employers/payers for employees’ COVID-19 infection tests, at the employer initiative, in order to detect and prevent its spread, and ensure business activity continues, during the state of emergency and/or alert, constitute non-taxable income and are not included in the monthly basis for calculating the compulsory social contributions.