Worldwide, governments are trying to cope with increasing budget pressures by introducing new measures for fighting tax evasion, encouraging voluntary compliance by taxpayers and enforcing automatic exchange of information at EU/EEA level and beyond. (Romania has an information exchange agreement with Guernsey and has initiated negotiations with the Bermuda Islands).
Consequently, exchange of information between states has gained significant momentum, with several bilateral or multilateral agreements, as well as European regulations on this topic being scheduled to come into force in the near future. For example, starting 1 January 2014, the EU plans to extend the automatic exchange of information to cover dividends and capital gains, and, as of 1 January 2015, Luxembourg, one of the last remaining strongholds of banking secrecy, will join the states participating in the automatic exchange of information.In addition to the international agreements, several states – Romania included– have modified their local legislation to make the identification of undeclared income easier and to encourage voluntary compliance.
Consequently, verification of high net worth individuals is continuing this year and, if differences in excess of 10%, but no less than RON 50,000, are identified between declared income and the personal tax report, the identification process moves further to the calculation of the adjusted taxable base through indirect methods. As part of the procedure for the identification of personal income tax, in January 2013, the compulsory filing of an assets, liabilities and income return upon request from the tax authorities was introduced.
Furthermore, in May 2013,as part of the international exchange of information policy, the tax authorities began a program to notify high net worth individuals about their fiscal obligations in relation to income derived from abroad, which must be declared on an annual basis in Romania.
The Romanian tax authorities now have in their possession all the instruments they need to implement measures to prevent tax evasion among taxpayers with high wealth. Consequently, a prudent approach and full tax compliance are recommended.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. The information presented in this video was last updated at 20 January 2014. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.