Author: George Trantea, counsel Filip & Company
The continuous state of alert in which we find ourselves for a year and a half leads to changes that otherwise we would not have hoped for soon. At least from a procedural and fiscal perspective, the documentary verification established as a rule, the subsequent control for VAT refunds or the simplification of the procedures for the payment in instalments of the principal and/or the cancellation of interest would have been unexpected.
According to the newly approved Ordinance no. 11/2021 amending the Fiscal Procedure Code, the provisional measures adopted during the period between 2020 – 2021 are converted into “Code”. This means, on the one hand, that the interim solutions have proved to be effective and, on the other hand, that these changes are based on a reality, which, unfortunately, is still the same.
The changes in the procedural and fiscal domains fully reflect the two principles underpinning the fiscal development: digitalisation and simplification. Even if most of the important provisions have deadlines for implementation in 2022, each of us must prepare in advance for their implementation and budgeting. The budget of trade companies for 2022 will be established taking into account shorter VAT refund deadlines but also the possibility to request simplified payment in instalments of the amounts due for the last year.
The main measures adopted in the field of digitalisation are related to the SAF-T (Standard Audit File for Tax) and the obligation of natural persons exercising a liberal profession or an independent economic activity to use the SPV (Virtual Private Space).
The SAF-T is recognised as an “informative declaration” that will contain items from the accounts and tax records. The failure to submit, and the incorrect submission of, such declaration (and the failure to correct it within the specified deadline) will be subject to fines from RON 500 to RON 5,000. By 1 January 2022, when these provisions will enter into force, the president of ANAF has business to take care of, such as to issue orders setting out the details regarding the nature of the information contained in the SAF-T, the deadline and the submission procedure. For guidance regarding the content of these future orders, please see – Programe și strategii (anaf.ro) – (Programmes and strategies), the SAF-T implementation guidelines having been updated on 9 August 2021. The testing of these files at the level of the voluntary taxpayers is scheduled to start on 1 September 2021 and the orders of the President of ANAF are expected to take over the comments of those who test these files.
Meanwhile, given the complexity of the data structure to be entered into these files by most taxpayers in 2023, IT specialists should be identified to support the accounting departments in conducting the verifications that will be required under these standard files.
From March 2022, the use of the SPV services by the natural persons exercising independent activities/liberal professions/authorised natural persons will become mandatory. The Code does not determine whether the SPV of the authorised natural person will coincide with that of the natural person holding such SPV, nor which will be competent tax authority (the one at the place of domicile of the natural person or the one at the headquarters of the entity used by it). However, it is specified that there will be a single tax interlocutor for the natural person taxpayer, mostly in a digital form.
In the area of the simplification, the measures put in place are among the most surprising. Not for their novelty (they had already been adopted during 2020 – 2021), but for the permanence of the mechanisms. In our view, the most important measures are the simplified payment in instalments and the subsequent control rule for the VAT refund.
In essence, the simplified payment in instalments enables any taxpayer to defer the payment of the tax obligations for 12 months, if such obligations are not older than 12 months. The novelty is represented by the condition relating to the maximum age of the tax obligations. How is this age determined in the case of the notices of assessment issued in the last 12 months, but which establish tax obligations for a previous period? The new provisions do not include sufficient details in this respect, but additional data may be available in the order implementing such measure, which will be issued by the president of ANAF. It should be noted that the payment in instalments will not be granted if there are outstanding principal or ancillary tax obligations which are older than 12 months. Therefore, if there are no outstanding tax obligations, at least for the previous 12-month period, a simplified payment in instalments is granted. Arrears, if any, prevent the granting of this benefit.
Regarding the VAT, the subsequent control rule is established in respect of the negative amount VAT returns, for which refund was requested. In theory, this means that VAT money will be obtained faster. The most notable exceptions are the first VAT return after the registration for VAT purposes or balances arising from reporting periods older than 12 months. The inspection decision will be taken on the basis of a risk analysis.
The message conveyed by the new provisions is “compliance”. If you are up to date with your returns and payments, the provisions will apply automatically, and you will be able to get a refund for the VAT blocked amounts or obtain payment in instalments for more difficult times. The same idea is integrated in Articles II and III of Ordinance no. 11/2021, which provide for the cancellation of the ancillary obligations included in the notices of assessment issued until 31 February 2021 or until 31 January 2022, in the case of documentary verifications.
In view also of the multitude of the reporting obligations, the integration of systems enabling real-time information exchange, it can be concluded that we are in the midst of tax changes that, on the one hand, are meant to lead to intense surveillance (DAC6 is aimed at monitoring even the shadow of a behaviour entailing potential tax effects) and, on the other hand, support the taxpayer when the payment of tax obligations becomes burdensome.
In a nutshell: conform and inform yourself and you will be free! Information becomes more important for the tax authorities than payment. Let’s hope it’s not only the shadow of what seemed to be a support measure.