As of January, 1st 2016, when the new Tax Procedure Code entered into force, ANAF began a campaign to notify companies that have not renewed their registered offices, threatening with declaring them inactive for tax purposes if their situation is not solved within 30 days after receiving the notice.
There are two ways to avoid this situation:
– Registered office extension, which is obtained by submitting to the Trade Registry an addendum that extends the initial lease contract; the average time for processing the application is 3 business days.
– Registered office change, which usually takes 5 business days to be obtained if the new office is established in the same county, and 15 business days if it is established in another county.
In addition, tax inactivity can be declared by ANAF in the following cases:
- The taxpayer does not fulfill any reporting obligation stipulated by the law, during a calendar semester;
- The taxpayer eludes central tax authority inspections by declaring identification data for its tax domicile that do not allow identification by the authority;
- The central tax authority takes note that the taxpayer is not operating at the declared tax domicile;
- In case of temporary inactivity registered with the Trade Registry;
- In case the operating duration of the taxpayer has expired;
- In case the taxpayer no longer has statutory bodies.
The procedure of declaring tax inactivity due to an expired registered office was established by ANAF Order No. 3846/2015, according to art. 92 paragraph (1) of the Tax Procedure Code.
This procedure is applied every month after ANAF receives information on the taxpayers from the National Trade Registry. A legal entity is declared inactive no sooner than 30 days after the taxpayer was notified.
Taxpayers that can prove, during the 30 days after they are notified, that they are no longer in the position for which they were mentioned on the list in the first place, will not be included in the Inactive Taxpayers Register. The proof will be either information sent by the National Trade Registry Office or a certificate issued by the National Trade Registry Office in order to clarify the situation, which will be submitted by the taxpayer to the tax authorities.
After the 30-day period expires, for each taxpayer that did not prove its situation is solved, the specialized department of ANAF issues a Decision declaring inactivity, which is sent to the taxpayer in question. Based on this Decision, the taxpayer will be registered in the Inactive Taxpayers Register.
Consequences of tax inactivity
Tax inactivity is a tax penalty which brings several limitations.
A company that was declared inactive and is carrying out economic activities during its inactivity period must pay all taxes and compulsory social security contributions, but during that period it is not entitled to deduct its expenses or any VAT related to the purchases it makes. According to ANAF Order No. 3846/2015, the VAT code is canceled when a Decision declaring inactivity is communicated.
Also, tax inactivity is mentioned in the tax offence record of the legal entity and of its legal representatives. Therefore, the individuals in question cannot become shareholders or directors of a company or members of an association or foundation.
According to the Tax Procedure Code, taxpayers that purchase goods or services from a company which was declared inactive are not entitled to deduct the related expenses and VAT either. There is just one exception, namely purchases made during foreclosure or bankruptcy proceedings.
In case an inactive company is reactivated, the tax inactivity information is eliminated from the tax offence record of the taxpayer. Under Ordinance No. 39/2015, the date of information elimination from the tax offence record is the three-month anniversary of the reactivation date.
Also, if a person no longer has the capacity of legal representative or designated representative of an inactive taxpayer, tax inactivity information is eliminated from the tax offence record of such person one year after the date when the change of the legal representative is mentioned in the Trade Registry records or in records of public authorities and institutions for other legal persons and entities without legal personality, or after the date the mandate expires, if it is time-limited and not renewed.
Moreover, in case of deregistration of a legal person, the tax inactivity information mentioned in the tax offence records of its legal representatives is eliminated one year after the deregistration date.
Information that is automatically eliminated from tax offence records can also be removed upon the taxpayer’s request.