ANAF has intensified this year the notifications for the individuals who earn or have earned income from abroad regarding their obligation of declaration and payment of the taxes due in Romania. The notification campaign is part of the income verification program. The program has two directions: the first targets those with large fortunes, over 20 million euros and the second analyzes the fiscal situation of persons considered with risk. In the category of individuals with fiscal risk enroll those individuals for which ANAF finds a difference between declared income and the estimated (according to expenditure, investments, real estate, cars, stakes in companies, bank deposits, etc.) of at least 50,000 lei (about 11,000 euros).
In this context, an increasing importance is given to income from abroad.
Who must declare?
The income from or abroad must be declare (by filing Form 201 “Statement on income from abroad”) by individuals who are tax resident in Romania. This category includes any person (Romanian or foreign citizen) that meets at least one of the following conditions:
What types of income should be declared?
Incomes from abroad that must be declared in Romania, whether they are received in Romania or outside Romania, are part of the following categories:
• freelance (independent proffessions);
• commercial activities;
• intellectual property rights;
• rental and leasing (ie. Income from renting of property or other movable property situated in the territory of another state);
• agricultural activities;
• dividends;
• interest, unless they are collected in accounts outside Romani or under civil contracts signed with non-residents;
• prizes;
• gambling;
• transfer of real estate from the personal property in case of the properties (houses, land) held outside Romania;
• transfer of securities (gains);
• operations of sale and purchase of foreign currency contract-based and other similar operations (gains);
• other investments
• pensions
Income must be declared for each country source of income for each category of income earned, even if for that type of income were submitted statements and, if applicable, taxes were paid in the source state. Under certain conditions the taxes paid in other states may be deducted from the tax due in Romania or income may be exempted of taxes in Romania. However, this income must be declared in Romania.
Employment abroad. When should you submit the declaration?
Romanian residents and those who meet the conditions of residency submit the income statement if they are employed abroad and are paid by or on behalf of an employer who is resident in Romania or by a permanent location in Romania (salary income is deductible expense of a permanent location in Romania), only if the same salary income has been taxed both in Romania and abroad.
The regularization of tax due by the Romanian resident is made by ANAF if the same salary income is taxed both in Romania and abroad (foreign state having the right to tax under the convention for the avoidance of double taxation).
Warning!! Income from dependent activities (employed) achieved abroad and paid by a non-resident employer are not taxable in Romania and should not be declared. However, if the activity is carried out on Romanian territory, such income may be taxed in Romania and should be declared by the individual by submitting monthly Form 224.
Rights and obligations in case of ANAF tax audit
ANAF modified the provisions of the Charter of rights and obligations of the individuals subject to tax audit (ANAF Order 1162/2016).
Regarding obligations, the declaration of assets and income should be submitted, for example, at the request of tax authorities. This declaration is stipulated by the Fiscal Procedure Code and requires information on real estate, vehicles, jewelry, art objects, antiques, numismatics, breed animals, accounts and bank deposits, investment funds, investments, direct investments, lending, insurance policies, personal expenses, liabilities, income, etc.
Another new obligation is to cooperate with ANAF to determine the fiscal status by presenting the facts known by the person entirely, according to reality, and by indicating the justifying means that the person is familiar with, according to the provisions of criminal law.
As regards the rights, the Charter includes: the right to be informed, to request delay of the tax audit, to receive specialized assistance (tax consultant or attorney) to change the place of the tax audit, to extend the deadline for submission of relevant documents and information, to collaborate and to appoint persons to provide information, to be checked only for taxes and duties are in the period of limitation, to know the results of the tax audit. Husband / wife, relatives up to 3rd degree have the right to refuse providing information, conducting surveys and the presentation of documents. Priests, lawyers, notaries public, tax consultants, auditors, expert accountants, medical doctors and psychotherapists also have the right to refuse to provide information.
Amended charter also provides that a person may choose the place of the tax audit. Previously, the tax audit could take place residence of the individual only if the individual was in physical impossibility to move. The tax audit can also take place at the location of the person who provides specialized assistance (tax consultant, lawyer).
Personal fiscal situation is verified through indirect methods of control – method source and use of funds, cash flows and net assets. The methods of determining the income and the procedures were modified from 1 January 2016, by Order 3733/2015.
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