Risk analysis system used by ANAF in Romania.
The Romanian National Agency for Fiscal Administration (ANAF) employs a structured approach to identify and investigate individuals and companies exhibiting high fiscal risk. This process involves a comprehensive risk analysis to ensure tax compliance and combat evasion. With this risk analysis system, ANAF identifies companies that represent a danger to the state budget
Understanding Fiscal Risk Criteria
ANAF classifies taxpayers into three risk categories: small, medium, and high. This classification is based on several criteria:
- Tax Registration: Ensuring entities are properly registered for tax purposes.
- Submission of Tax Returns: Timely and accurate filing of required tax documents.
- Level of Declaration: Consistency and accuracy in declared income and expenses.
- Fulfillment of Payment Obligations: Adherence to tax payment schedules and amounts.
These criteria are detailed in ANAF Order 2.017/2022, which outlines the risk sub-criteria used in assessments.
What are the main inconsistencies considered in the analysis of this fiscal risk sub-criteria?
The tax legislation contains no specific provisions that clarify these aspects or expressly state what correlations must exist between the declared data.
In the following, the two situations that were frequently identified by ANAF and which led to the start of fiscal controls are listed in order to clarify the factual situation, and those would be:
- Inconsistencies between the amounts included in the corporate tax returns and the amounts reported in the financial statements
- Discrepancies between the VAT return obligations of the taxpayer concerned and those related to its partners.
Indicators Triggering ANAF Investigations
For Individuals:
ANAF monitors individuals whose lifestyles and financial activities significantly exceed their declared incomes. Key indicators include:
High-Value Transactions: Purchases of real estate over EUR 70,000, vehicles over EUR 25,000, or substantial bank deposits exceeding EUR 34,000.
- Large Loans to Companies: Associates or shareholders lending over EUR 45,000 to their companies. POINT OF ATTENTION
- Unjustified Wealth Accumulation: Significant assets or expenditures not supported by declared income.
If discrepancies exceed 10% and at least RON 50,000 (approximately EUR 11,000), ANAF may initiate a detailed investigation.
For Companies:
Businesses may attract ANAF’s attention due to:
- Inconsistencies in Financial Reporting: Discrepancies between tax returns and financial statements. POINT OF ATTENTION
- Unusual VAT Declarations: Differences in VAT returns compared to partners’ reports.
- Persistent Losses: Reporting losses over multiple years, especially when involved in related-party transactions.POINT OF ATTENTION
- Profit Margins Below Industry Averages: Margins are significantly lower than those of other companies in the same sector.
- Complex Corporate Restructurings: Mergers, spin-offs, or insolvencies that may obscure financial clarity.
Some event triggers for companies:
- Newly established companies that had a share transfer in the last 12 months
- Companies that have frequent changes in their registered office or administrators, or associates.
- Economic operators who have not conducted economic activities in the last 12 months can lead to inspection and radiation of the company by ANAF if the company was inactive for a couple of years.
- Economic operators that have been granted a VAT exemption on their products
- Companies with an inadequate fiscal history and that had outstanding debts to the national budget in the last 5 years.
- Companies that did not submitted tax declarations in time in the last 12 months. So it is important to send your bank account statements of all your accounts every month before the 5th for the month that has passed to your accountant. If the accountant does not receive these statements he cannot do your accountancy and as a result he will not declare for that month. POINT OF ATTENTION
- Commercial activities with phantom companies used for fiscal evasion or companies that are on the ANAF blacklist
- Companies that have associates or administrators who previously have been associates or administrator in companies that have been formally delisted by ANAF in the past
- Or that have entered in insolvency procedures, legal restructuration or bankruptcy
- Economic operators that have late payment of fiscal obligations: repeated delays in paying VAT, Profit Tac, Salary Tax, etc.…These are monitored closely especially when the company has large outstanding dents towards the national budget. Pay your taxes in time ! Every month before the 20th of each month (approximatively as there is a table issued by ANAF per month for the ongoing fiscal year) POINT OF ATTENTION
- Economic operators who have declared “inactive” (the procedure allows a maximum of 3 years) and that have not been reactivated in the last 12 months
The Investigation Process
- Risk Analysis: ANAF conducts an initial assessment using internal data and third-party information.
- Preliminary Verification: If risks are identified, a prior documentary verification is performed without notifying the taxpayer.
- Notification and Compliance Opportunity: Taxpayers are informed of findings and given 30 days to address issues before a formal audit.
- Formal Audit: If discrepancies persist, a comprehensive audit is initiated, during which taxpayers can present supporting documents.
- Conclusion: The audit concludes with either the imposition of tax obligations or the closure of the case without penalties.
Consequences of Non-Compliance
Failure to comply with ANAF’s requests can result in:
- Fines: Penalties ranging from RON 10,000 to RON 50,000 for not submitting required declarations.
- Criminal Prosecution: In cases where tax evasion is evident, legal action may be pursued.
When debts remain unpaid in the first instance AANF will block all accounts in Romania. If there is enough money on the accounts they will take it immediately (it si called “poprirea” in Romanian language) if the company does not react and take action after that the company has been executed.
When there is not enough money on the account and they are blocked then you have a big problem as you cannot even wire Euro’s in your account and change them to Ron as a foreign associate. In some countries the associates can directly transfer Ron in their Romanian bank account and then ANAF will take it and the procedure to unblock the company accounts is more easy. POINT OF ATTENTION
We also had a lot of companies that lost their VAT number temporarily, as we could fix it. Unfortunately, some lost it permanently as the had repeated cancellation of their VAT number and there was nothing that we could do.
Proactive Measures for Taxpayers
To mitigate the risk of investigation:
- Maintain Accurate Records: Ensure all financial transactions are well-documented and align with declared income.
- Timely Declarations: Submit all tax returns and payments promptly.
- Transparent Transactions: Avoid complex structures that may obscure financial clarity.
- Seek Professional Advice: Consult tax professionals to ensure compliance with current regulations.
Understanding ANAF’s fiscal risk criteria is crucial for both individuals and companies operating in Romania. By maintaining transparency and adhering to tax obligations, taxpayers can minimize the likelihood of audits and associated penalties.
We are there to assist if you have problems with ANAF. Just call me on +32 478 331 799 or mail me frjacobs@telenet.be
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