The Emergency Ordinance no. 41/2022 has been adopted in April 2022 and it introduced in Romania the RO e-Transport system. Since then, a number of legal issues came through and the Costaș, Negru & Asociații team took time to look into it.
In the explanatory memorandum it is shown that this Ordinance no. 41/2022 has been adopted as a response to the necessity to implement and operationalise a digital monitoring system targetting the transport of goods. Its purpose is to increase the degree of collecting taxes owed to the national budget and to prevent the illicit commercialization of goods.
Additionally, the new administrative formalities target high fiscal risk goods, whose commercialization generate significant revenues for the state budget, as a merchant is usually tempted to elude the State and to avoid paying taxes for the revenue. Hence, what transpires from the explanatory memorandum is that this new monitoring system has the purpose of strengthening the fight against tax fraud and tax evasion, through digital means, specific to the new digital era.
Analysing this Ordinance, one can observe that the new administrative formalities seem to be the result of overzealousness, as these are problematic in terms of proportionality, in comparison with the gravity of the contraventions. In this articol, we aim to look over these issues.
Essentially, the EO no. 41/2022 states that through the new system, road transports of high fiscal risk goods on national territory and international road transports of goods are monitored. The users who are subject to this Ordinance, as defined in Article 8, are obligated to declare any information regarding their consignment of goods that they are delivering, which will later be used for generating the UIT code. The information can be reported 3 days before the declared date for initiating the transport, however until the code is presented at the frontier when entering Romania or at the place of import, or the moment when the vehicle is effectively put in motion. The code is available for 5 days or 15 days, in case of intracommunitary purchase of goods, as well as commercial operations as defined in art. 2 point 9 lit. g) and j), starting from the declared date for initiating the transport. It is forbidden to use the UIT code after its availability period.
After the UIT code is generated in the e-Transport system, the user is obligated to show the code when requested to do so by the competent authorities, from the National Fiscal Administration Agency or from the Romanian Customs Authority, as well as the documents that are attached to the transport operation, after or by the latest presenting the vehicle to the border crossing point when entering Romania or at the place of import, or when effectively putting the vehicle in motion.
Before the promulgation of E.O. no. 43/2024, Article 13 regulated the sanctions for disrespecting some of the norms from the EO no. 41/2022, including the omission to record the data required in the e-Transport platform and the omission to present the UIT code when requested by the competent authorities. It is important to note that these acts constitute contraventions, therefore any gaps in the EO shall be filled by norms from the Government Ordinance no. 2/2001 regarding the legal regime of contraventions.
According to the first paragraph, the refusal to present the UIT code and not recording the data in the system will be sanctioned with a fine ranging from 10.000 lei to 50.000 lei for natural persons, or with a fine ranging from 20.000 to 100.000 lei for legal persons, as well as the seizure of goods which were not declared. For other contraventions mentioned in the same article, the fines range from 5.000 lei to 100.000 lei, depending on the offence.
As we have previously mentioned, from the Ordinance’s explanatory memorandum it can be deduced that its promulgation is a step forward in the fight against tax fraud and tax evasion, in the context of the new digital era. There is no exact European regulation tackling this obligation to implement such a monitoring system for the Member States. The reason behind this could be that this new e-Transport system has the aim to safeguard the national tax interests, which offers exclusive competence for the Member States to regulate whatever measures that they consider suitable for attaining this goal. Therefore, the European Union does not possess any competence in this matter, therefore it cannot adopt compulsory acts which have to be respected by the Member States.
There is a novel Regulation (Regulation no. 2020/1056) that only tangentially covers the issue of informatic systems created for collecting information concerning the transport of goods, which can have a tax implications. According to the Regulation, the Member States have to accept information from economic operators sent through digital means and to adapt their infrastructure, so that economic operators could efficiently transmit information. Additionally, the Regulations establishes the functional requirements for the exchange system between the economic operators and the national authorities who are competent in this matter.
Although the Emergency Ordinance no. 41/2022’s purpose does not in itself incite any controversy, as it is in accordance with the standards imposed by the European Union, in the context of digitalising public administration and improving the fight against tax fraud, after perusing the text one can notice one of the most important articles of the Ordinance could have raised issues in regard to the proportionality principle: article 13, which regulates the applicable sanctions in case of not complying with the Ordinance.
As a preliminary note, it is not to be contested that the State has the right to adopt any stringent measure to protect its own financial interests. The European Court of Justice has held, in the Profaktor Kulesza[1] case, which touched upon the compatibility of an obligation to report information whose infringement resulted in temporarily limiting the right to deduct VAT, that „the Member States, (…), may impose other obligations which they deem necessary for the correct levying and collection of the tax and for the prevention of fraud”. Despite the fact that the case regarded the value-added tax, the reasoning could be mutatis mutandis applied in any other type of measure with fiscal implications. However, this competence is subject to some limitations, as the legislator has to fully comply with the principle of proportionality. In this regard, in the Louloudakis[2] case, the European Court of Justice of the EU has established that „in the absence of harmonisation of the Community legislation in the field of the penalties applicable where conditions laid down by arrangements under such legislation
are not observed, the Member States are empowered to choose the penalties which seem appropriate to them. They must, however, exercise that power in accordance with Community law and its general principles, and consequently with the principle of proportionality”.
Therefore, the principle of proportionality has to be borne in mind by the legislator as a benchmark, when implementing any type of tax measure.
As a short recap, article 13 stated that for ommitting to present or generate the UIT code and for not declaring the information regarding the consignment of transported goods, fines are to be applied, whose amount varies depending on the quality of the user, natural or legal person respectivelly. The law establishes two ranges: between 10.000 lei and 50.000 lei for natural persons, and between 20.000 lei and 100.000 lei for legal persons. Irrespective of the user’s quality and of the fine imposed as a result, the seizure of undeclared goods shall also be disposed. These acts constitute contraventions, „as long as they are not committed in such a manner that would categorise them as criminal acts, according to criminal law”.
The most problematic aspect enshrined in article 13 is the fines range and the manner in which these acts have been described. As we have previously mentioned, the e-Transport system is a purely administrative measure, which has the purpose of, inter alia, facilitating the monitorisation of transports of goods.
Hence, not complying to the obligations associated with this system leads to the user not being able to perform its obligations under the transport contract that they have signed with the beneficiary. It is excessive to presume that by not reporting the required information or by not generating the UIT code, the person who had this obligation created the premises for committing tax fraud. This act can be committed as a result of minor negligence, which does justify a fine in this range. Furthermore, we are of the opinion that the regulator has not complied with the standards imposed the European Court of Human Rights, in regard to the clarity of an incriminatory legislative text, by virtue of Article 7 of the European Convention of Human Rights. Practically, the legislator did not explain the conditions in which an act committed could constitute a contravention under this legal text, especially regarding the form of guilt. This ommission, maybe intentional, maybe not, could lead to perpetuating an arbitrary practice among the competent authorities in this domain to sanction any acts that are committed due to negligence. As the European Court of Human Rights has held in the Cantoni[3] case, the law is predictable, as long as an individual could, even when legally assisted, assess whether an act or ommission could constitute a criminal act, this principle being applicable especially in the case of individuals who are engaged in professional activities, in whose case it is presumed that the standard of dilligence applicable to them is stricter. Or, Ordinance no. 41/2022 particularly pertains to professionals in the domain of transport, therefore it is dire that a legislative text which imposes sanctions be as clear as possible.
Last but not least, another aspect which can be deemed questionable is imposing seizure as a complementary sanction. The seizure shall be applied regardless of the fine or of the circumstances in which the act was committed, therefore it is a fixed sanction. In this context, it is possible for a transport who has committed an act or ommission under this text to be sanctioned with a fine leaning towards the lower range amount wise and to have their goods that were obtained through legal means seized, despite their ommission or act being committed because of light negligence. In the MV-98[4] case, which regarded the proportionality of a complementary measure of sealing the economic operator’s place of business, alongside the pecuniary sanctions imposed related to VAT, The Court of Justice has stated that, regarding the principle of proportionality, ‘it requires that the cumulation of proceedings and penalties provided for by national legislation, such as that at issue in the main proceedings, not exceed what is appropriate and necessary in order to attain the objectives legitimately pursued by that legislation, it being understood that, when there is a choice between several appropriate measures, recourse must be had to the least onerous and the disadvantages caused must not be disproportionate to the aims pursued’. In the case of EO no. 41/2022, we opinate that it was not the case for such a complementary sanction, considering that the fine has a strong enough dissuasive and punitive effect and the contraventions do not pose a significant degree of gravity. As it has been suggested in the doctrine, ‘any administrative act that imposes a fixed sanction (principal or complementary), impeding the competent authority and the court to apply this principle in accordance with the factual circumstances of the case, is illegal (or suspected of being unconstitutional, in case of laws, because proportionality is more subtle form of citizens’ equality before the laws’[5] (trad. M.M.).
Following an avalanche of complaints regarding contraventional sanctions by virtue of Article 13, a new Emergency Ordinance has been adopted: E.O. no. 43/2024 for modifying and completing some normative acts, including E.O. no. 41/2022. According to Article II point 2, article 13 will include the following: “Excepting from the regulation set forth in alin. (2), for the contravention mentioned in alin. (1) letter a), regarding disrespecting article 9 alin. (2), the seizure will not be implemented in case of reports that have taken place after the road transport of goods has finished, when it has been registered in the justificative documents which fundament the accounting records, as well as in the users’ accounting, during the time when those operations have been conducted”.
Hence, it seems the lawmaker has been receptive towards the objective criticism regarding the lack of proportionality in Article 13 and has finally clarified the conditions of this complementary sanction. Given that the acts commited are contraventions and that, according to the European Court of Human Rights, a contravention can be conisdered an ‘accusation of a criminal nature’[6], the more favourable law principle will be applicable, therefore the new legal text will be applied, for the contraventions that are currently tried after the 30th April.
This article was drafted, for the Costaș, Negru & Asociații – Lawyers’ Civil Partnership blog, by Atty. Miruna Mihuță, affiliated to the Arad Bar Association and by Atty. Andrei Fătu, affiliated to the Cluj Bar Association.
Costaș, Negru & Asociații is a lawyers’ civil partnership with offices in Cluj-Napoca, Bucharest and Arad, providing legal assistance, representation and consultancy in a number of practice areas with a team composed of 16 lawyers and consultants. Details regarding legal services and the members of the team can be found on the website https://www.costas-negru.ro. All rights for the materials published on the company’s website and on social media belong to Costaș, Negru & Asociații, their reproduction being allowed only for information purposes and with the correct and complete disclosure of the source.
[1] Decision from 29 July 2010, Profaktor Kulesza, Frankowski, Jóźwiak, Orłowsk (C-188/09)
[2] Decision from 12 iulie 2001, Louloudakis (C-262/99).
[3] European Court of Human Rights, Cantoni v. France, decision from 11 November 1996.
[4] Decision from 4 May 2023, MV-98 (C-97/21, ECLI:EU:C:2023:371), paragraph 56.
[5] O. Podaru, R. Chiriță, I Pășculeț, Regimul juridic al contravențiilor, 4th Edition, Editura Hamangiu, București, 2019, p.82
[6] See Öztürk v. Germany, European Court of Human Rights’ decision from 21 February 1984.
