16
Aug2018

Accesory Tax Interest. Tax Penalties

The High Court of Cassation and Justice referred to its Section for the Interpretation of Legal Matters for preliminary ruling an interpretation on the following legal matter:  In interpretation of article 120 of the Government Ordinance no. 92/2003 regarding the Tax Procedure Code, can we consider interest or delay interest as being tax penalties to which the principle of proportionality should be applied, according to what the Court of Justice of the European Union stated in case C-183/14, Salomie & Oltean? (decision of May 22nd, 2018). We are pleased to say that this referral concerned a tax case administrated by Costaș, Negru & Asociații while legally representing a real estate developer from Cluj-Napoca.

The High Court divided the three questions put forward by our lawyers as such:

  1. Do default interests, penalties for delay and tax interest rates collected from the taxpayers under articles 119, 120 and 1201 of the former Tax Procedure Code (Government Ordinance no. 92/2003), applicable from the 1st of January 2007 to the 31st of December 2015, have the nature of “tax penalties”, considering:

(a) the amount of these accessory tax liabilities in the relevant period;

(b) the possibility of timeless accumulation of accessory tax liabilities associated to the main tax liabilities;

(c) the purpose of applying accessory tax liabilities?

  1. Do tax interest rates, penalties for delay and penalties for undeclared taxes collected from the taxpayers under articles 173 – 176 and article 181 of the new Tax Procedure Code (Law no. 207/2015), as from the 1st of January 2016, have the nature of “tax penalties”, considering:

(a) the amount of these accessory tax liabilities in the relevant period;

(b) the possibility of timeless accumulation of accessory tax liabilities associated to the main tax liabilities;

(c) the purpose of applying accessory tax liabilities?

III. Do articles 119, 120 and 1201 of the former Tax Procedure Code (Government Ordinance no. 92/2003), applicable from the 1st of January 2007 to the 31st of December 2015, as well as articles 173 – 176 and article 181 of the new Tax Procedure Code (Law no. 207/2015), as from the 1st of January 2016, allow tax courts, in the light of the proportionality principle of accessory tax liabilities and the national courts’ obligations under the Court of Justice of the European Union’s judgment in the legal affair Salomie & Oltean (C-183/14) from the 9th of July 2015, primarily paragraphs 50 – 53, to reduce the accessory tax liabilities described as “tax penalties”, in what amount and based on what criteria?

We find this referral able to lead to clarifying the aspects concerning the accessory tax liabilities regime in cases with regard to the real estate natural person developers’ tax situation – subsequent to the imposing of the VAT liability.

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