Romania Passes Tax Evasion Law

Romania’s Law Exempting Criminal Liability for Tax Evasion of Less than €1 Million Deemed Constitutional

On Tuesday, Romania’s Constitutional Court upheld a law consistent with the Constitution, which abolishes criminal penalties for tax evasion of amounts less than €1 million, removing the final obstacle for this reform of criminal legislation to take effect.

According to the law passed in Romania, no longer will criminal penalties be imposed for tax evasion if the offender pays the corresponding taxes along with penalties and a fine amounting to 15% of the unpaid taxes within 30 days of receiving the tax authority’s notice, as reported by Euractiv.

If all amounts are paid before the first court hearing, the fine is reduced by half.

Two opposition parties attempted to challenge the law in the Constitutional Court, yet the court deemed it constitutional, emphasizing that in cases of illegal income, the state’s primary goal should be to identify the assets or their value and confiscate them for allocation to the state budget.

The law was passed in December 2023 with the votes of the ruling coalition in Romania, comprising left and right centrists, who stated that the government’s interest lies not in imprisoning individuals but in recovering unpaid taxes. The government clarified that this isn’t decriminalization because criminal liability remains in place for repeated violations.

Laura Kövesi, the head of the European Public Prosecutor’s Office, expressed concern over the law adopted in Romania. In her assessment, it may hinder cross-border cooperation between law enforcement agencies, thereby jeopardizing Romania’s obligations within the EU.

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