Last week I was traveling so I was unable to complete my blog. I apologize to those who missed it. Holidays and conferences get in the way, but at least it should allow some time for reflection.
Indeed one of the pleasures of summer is that politicians go on holiday and there should be a slowdown in the issuing of regulations. Romania does not seem to want to do that and so we must continue to monitor carefully not only the Government but also the Government Agencies.
Recently, on 18 July 2014 Order no. 1847 was issued by the President of the National Agency for Fiscal Administration to cover the approval of the application and the forms to be used by inactive taxpayers.
An inactive tax payer under the current legislation, where such inactivity is not requested by the company itself, includes a company or any entity without legal personality which finds themselves in one of the following situations: if a company they have not filed the declarations prescribed by law, during a calendar period; if the company have tried to avoid a tax inspection by declaring wrong identification data, so that fiscal authorities cannot identify and locate them; when tax authorities have discovered that the company does not have its headquarter at the declared address.
Order no. 1847/2014 the new formats of the forms regarding, the decision for declaring inactive taxpayers, the decision for reactivating inactive taxpayers, the correction procedure for material errors and the rejection decision, when taxpayers are requesting the reactivation or the error correction.
According to this normative act, from the moment a taxpayer has been notified by Fiscal Authorities that it has become inactive, its VAT registration is automatically cancelled. The VAT registration will be considered valid again from the date of reactivation.
If the fiscal status of a company is accepted as inactive, there are several consequences that flow from this.
Firstly, the inactivity has to be registered in the fiscal record for both the company and any legal representative. The inactivity will be cancelled after 5 years, so during this period the legal representative cannot open another company.
There are also other negative consequences for having a registered fiscal record. The company will not be able to borrow money from banks during this period. If any other authorities, entities or institutions require a fiscal record, the inactive company will have difficulties because of its inactivity status. Another consequence of fiscal inactivity is that the company cannot carry out VAT operations. So in this way the company may lose its credibility in front of its business partners.
Should a company be declared inactive by the tax authorities it can appeal the decision. The appeal shall be addressed to the fiscal department that manages the taxpayer register. After receiving the answer of this department, the taxpayer may apply to the Court to overturn the authority’s decision. .
The good news is that there is a way to avoid the consequences if a company does not wish to be declared inactive. Before becoming declared inactive, the company will receive a written decision from the Fiscal Authority. From the moment of receiving the notice, there are fifteen days to comply with the legal requirements and to cover all the omissions indicated in the decision. If the company does not comply the taxpayer is declared inactive with all the consequences set out above.
In conclusion there are some companies who through ignorance become declared inactive. All fiscal subjects and especially companies should pay attention to all the fiscal responsibilities that they have in order to avoid the consequences of inactivity. It is wise to check at least once every semester to see if the company has fulfilled its fiscal declarations. If not then the company or its legal representative will bear all the legal consequences, not to mention the fees they must pay because of the delay and to be re-instated as an active company.