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Government Emergency Ordinance no. 102/2022 amending the Fiscal Procedure Code (Law no. 207/2015) was published in the Official Journal of Romania on 30 June 2022, including specific fiscal regulations in terms of the automatic exchange of information. The new approved regulations transpose the recommendations of the experts of the OECD World Forum and of the European Commission regarding the implementation of the Common Reporting Standard on financial accounts. The ordinance also transposes into national law the European rules on the mandatory automatic exchange of information in the field of taxation.
These international rules govern the obligation of the reporting financial institutions (credit institutions, depository institutions, investment entities or certain insurance companies) to provide ANAF with information on the financial accounts of non-resident taxpayers. Following the reporting, ANAF will exchange information with the country of residence of these taxpayers in order to increase the efficiency of tax collection.
The main aspects which must be considered are related to:
- new specific administrative tax procedures which will be applicable going forward in the communication between ANAF and the financial reporting entities, respectively for the verification of the compliance with the tax due diligence procedures applicable in terms of FATCA/CRS in accordance with the relevant annexes, including the monitorization of the financial reporting entities which will report undocumented accounts. Such administrative procedures will be published by ANAF in the upcoming months (within 90 days from the date of publication of this Ordinance);
- the obligation of the financial reporting entity for keeping in electronic and/or physical format all the records/documents obtained during the tax due diligence procedures and the supporting documents of the efforts performed for complying with the FATCA/CRS regulations for a period of ten years from the annual reporting deadline;
- the obligation of the financial reporting entity to apply the reporting procedures and tax due diligence procedures of the automatic exchange of information in terms of reportable accounts as detailed in Appendix 1 and Appendix 2 of the current Ordinance;
- details regarding the data related to a reportable account which will be exchanged between the Romanian tax authorities and the foreign tax authorities
- introducing administrative sanctions and fines for the financial reporting entities for non-complying with the FATCA/CRS obligations as follows:
- fines between RON 2,000 and RON 5,000 for each reportable account in case of non-reporting, reporting with delays or incorrect or incomplete reporting of the financial reporting entity;
- fines between RON 5,000 and RON 10,000 for each reportable account in case of failure in applying the tax due diligence and reporting procedures in terms of FATCA and CRS by the financial reporting entity;
- fines between RON 20,000 and RON 100,000 in case of failure in keeping all the documentation obtained during the tax due diligence and reporting procedures;
- fines between RON 5,000 and RON 10,000 for each reportable account in case of failure in providing ANAF with the requested documentation.
We mention that the provisions of the Ordinance are applicable starting with 30 June 2022, excepting the provisions related to administrative sanctions and fines which will entry in force within 30 days from the date of publication of the Ordinance in the Official Journal, without having a retrospective character.
In view of the amount of the newly introduced fines, it becomes crucial, in addition to reporting itself, that reporting financial institutions apply due diligence procedures in a consistent manner, as well as that all records, information and documents related to the application of due diligence and reporting procedures are kept in order to be able to be provided on request to ANAF representatives.