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The sale of the company will be possible only after the tax audit

The sale of the company, in the first year of activity, will be made only after the completion of the tax audit, according to a provision proposed to the law no 31/1990. The proposition is meant to fight fiscal evasion establishing an additional mechanism of budgetary protection.

Recommendation: Contexpert considers that, once this provision will be in force, those who intend to sell/assign their shares must pay more attention to the fiscal situation of the company before making the decision. The tax audit might last too long and any further difficulties determined by the tax auditors could postpone the sale and, in extremely, block it.

The impact?

Positive effects

• For companies: the limitation of fiscal evasion is in favor of the honest companies that get rid of the unfair competion
• For fiscal authorities: the sale of the companies with debt, that did not declare their taxes or made false declarations harm the state budget

Negative effects

• For companies: assignment of the social parts will last longer, especially because the legal provisions do not  include precise terms, except of the term for beginning the tax audit (30 days)
• For tax authorities: associates might litigate the provision, considering it restricts a fundamental right guaranted by Constitution

The text of the proposition

The provision was adopted by the senators and was sent to the the Chamber of Deputies.  The draft was initiated by Darius Valcov before his appoitment as minister of Finance.

According to the draft, the new provision of the article 202 is:

The assignment, in the first 12 months of activity of a company, of at least 50% of its social parts to one or more persons can be done and becomes opposable to a third party only after the tax audit made by the fiscal bodies of NAFA. It is done in maximum 30 days.

The necessity of this measure

The assignment of social parts without payment of debts has become a common practice and the tax inspectors discover the facts of tax evasion only after the transaction is completed. In most cases, they have no possibility to make the former associates responsible because the individuals can no longer be identified.

Observations

However, the point of view of the government was negative at the time the draft was initiated. The government considers that the provision violate the fundamental right to property, “the failure to appropriate the effects that the proposed measure has on the transfer of the social parts are elements that can lead to restriction of this fundamental right”.

The executive also finds the text is unclear as regards the effects of the tax audit for the associates as long as it aims the activity of the company and, without a legal action, the individuals cannot be held responsible for the budgetary debts of the company.

! The provision will be in force only after it will be approved by the Chamber of Deputies.