Tax Controversy 2026 Comparisons

Tax controversies stem primarily from tax audits performed by the Romanian tax authorities. Taxpayers usually disagree with the manner in which tax legislation is interpreted or applied by tax audit teams, often as a result of poor understanding of business models or insufficient data collected by inspectors. A constant hot topic in tax disputes is represented by procedural irregularities in conducting tax audits. Tax controversies also arise from various administrative decisions or lack thereof – for example, decisions not to grant interest for VAT amounts reimbursed for significant delays.

Corporate income tax and VAT give rise to most tax disputes in terms of number, followed by withholding tax. The highest values are disputed in tax controversies regarding VAT – a tax which, it is worth noting, currently occupies the top spot in terms of tax revenue to the Romanian State budget.

One of the most efficient ways to avoid tax controversies is to ensure strict compliance with the above-the-average requirements for documenting economical operations/transactions, as most tax controversies arise from tax audits that challenge expenses deductibility or VAT deductibility. This is even more the case as Romanian tax authorities show an exceedingly formalistic approach and do not hesitate to deny taxpayers’ substantive tax rights on the basis of often minor formal irregularities.

At this point in time, the BEPS recommendations/EU measures to combat tax avoidance have limited impact on tax controversies in Romania, as the average duration of a tax dispute is four to five years; thus, currently it is too early to look for a noticeable impact of said measures and recommendations on tax controversies. Moreover, Romanian authorities are notoriously sluggish in adopting and implementing recommendations and measures formulated by international bodies.

Challenging an additional tax assessment (administratively or in court) is not in any way conditioned by performing the payment of the overdue amounts or seeking the suspension of enforcement for the overdue amounts.

The Romanian Fiscal Procedure Code sets out three risk categories for taxpayers (high/medium/low) which are determined by taking into account seven criteria:

• tax registration;
• submission of tax returns;
• self-assessment level;
• payment of tax liabilities/other overdue amounts;
• the use of modern means of payment;
• financial capacity to pay tax liabilities; and
• past conduct with respect to declaring/paying tax liabilities.

As a matter of principle, the selection of taxpayers to be subject to tax audits is based on a risk assessment performed by the tax authorities. However, at this point in time, this procedure is non-transparent and cannot be challenged in any way by taxpayers, who, at most, can request to be informed of their level of tax risk as determined by the tax authorities.

Of course, this lack of transparency may give rise to questions regarding the randomness of the selection process. The stated intention is to adopt legislation aiming at a more transparent audit selection process; however, this intention is yet to materialise. It is worth noting that tax audits are targeted at specific issues or specific industries, changing focus from time to time depending mostly on budgetary priorities.

As a rule, tax audits must be initiated within the statute of limitations period of five years (ten years in the case of tax evasion). The maximum duration of audits is determined by taking into account the taxpayer category: 180 days for large taxpayers, 90 days for medium taxpayers and 45 days for small taxpayers.

If the audit exceeds double the maximum duration, the audit must be stopped and the tax authorities are barred from making any additional tax assessment. In practice, the actual duration of audits can be far greater, as tax inspectors exploit the possibility of suspending audits for various reasons while, as per the law, suspension periods are not taken into account for determining the total duration of the audit. The commencement of a tax audit suspends, not interrupts, the statute of limitation period only if the inspectors comply with the maximum legal duration of the audit prescribed by law.

As per the Romanian Fiscal Procedure Code, tax audits are normally conducted in the tax authority’s headquarters; only by way of exception should tax audits occur on the taxpayer’s premises. However, in practice most tax audits are carried out on the taxpayer’s premises. Most data is made available to the tax inspectors by electronic means, while printed documents might sometimes be requested by those inspectors that favour a more formalistic approach to conducting audits.

Key areas/matters for tax auditors’ special attention include the following:

• management fees – considering the authorities’ formalistic approach, the acquisition of management services must be thoroughly justified on the basis of documents proving actual performance and economic benefit to the company;
• affiliate transactions – currently (ie, in 2026), a massive audit campaign is being carried out by the tax authorities targeting large taxpayers and especially transactions with affiliates; and
• VAT deductibility – this issue is especially important for tax authorities as Romania constantly ranks last among EU member states from a VAT gap perspective, losing around one third of VAT revenue each year.

Coss-border exchanges of information and mutual assistance between tax authorities are relatively new procedures for the Romanian tax authorities, which prove reluctant to conduct them – virtually no tax audits are conducted because of cross-border exchanges of information and mutual assistance between tax authorities. However, tax authorities sometimes request cross-border information in the context of ongoing tax audits, and mutual assistance is requested during enforcement procedures.

Key strategic points to consider during a tax audit include:

• exhaustive compilation of justifying documentation, considering the formalistic approach of inspectors;
• be prepared for audit teams to not always follow procedural rules governing tax audits;
• consider challenging intermediary decisions issued by the tax audit body – eg, decisions to suspend the audit, which should be challenged within 45 days from communication, irrespective of the fact that the tax audit continues; and
• close observance of deadlines set by the inspectors, as non-observance can sometimes give them a free hand in determining the tax implications of operations carried out by the company.

As per Law 554/2004 regarding administrative disputes, the administrative claim or administrative appeal phase is mandatory before going to court. The administrative appeal must be filed within 45 days of receipt of the additional tax assessment receipt. The administrative appeal must be lodged with the issuing tax authority; however, it will be settled by an authority within the Ministry of Finances specialised in settling tax appeals – ie, separate from the national tax authority, the National Agency for Fiscal Administration, which is itself subordinate to the Ministry of Finances. The procedure before the specialised settlement authority is a semi-judicial one where each party (ie, the appellant and the tax authority that issued the additional tax assessment) is expected to present its point of view before reaching a decision on the tax appeal.

As a rule, the specialised settlement body should settle the administrative claim within 45 days of filing. Should the administrative claim not be settled within six months of its filing, the taxpayer may address the courts of law directly. Once the courts of law are notified, the specialised settlement body is barred from issuing a decision on the administrative claim and the case will be settled exclusively in court.

Tax litigation can be initiated within six months of:

• lodging the administrative claim, if it is not settled by the specialised authority; or
• communication of the decision settling the administrative claim.

Court claims may be lodged by submitting printed documents to the court, by sending the claim by post or by electronic means of communication. After verifying whether the formal conditions for filing the court claim are met and allowing the claimant to address any such formal issues, the court communicates the claim to the tax authorities, which may submit statements of defence.

There are four main stages of a judicial procedure.

• The written stage: lodging the court claim, submitting the statement of defence against the claim, and submitting the reply to the statement of defence (optional).
• The debates stage: usually, the debates take place over more than one court hearing. If a tax expertise report is requested, multiple intermediary hearings may be set until the completion of the expertise procedure.
• The deliberation stage: the judge takes the case under advisement and deliberates.
• The decision-making stage: rendering the solution, which is usually made available on the court’s website.

It is also worth noting that, after the solution is rendered, the court must draft and communicate its decision to the parties outlining the grounds for its solution within 30 days. In practice, this deadline is rarely observed and is extended with successive 30-day periods.

Documentary evidence is the most relevant and the most common evidence in civil tax litigation and may be presented both before the first-instance court and in appeal. Considering that in Romania there are no judges specialised in tax litigation, the opinion of tax experts is of a particular importance; therefore, tax expertise procedures are usually ordered by the courts. Such procedures may be performed only before the first-instance court by independent, court-appointed experts, who may be joined by side experts nominated by the parties. Although far less common, cross-examination is admissible and sometimes performed in civil tax litigation.

In civil tax litigation, the burden of proof rests with the one who makes a claim – usually the taxpayer. However, the tax authority is obliged by law to present to the civil court any and all documents on which it based a decision to assess additional tax. As a general rule, in criminal tax litigation the burden of proof rests with the public prosecutor.

From a strategic point of view, it is recommendable to produce evidence before the first-instance court, as during the appeal new evidence can be presented only in documentary form. Special attention must be given to the strict procedural rules that govern the provision of evidence before the civil courts of law. As per the current legislation, settlement with the tax authorities is strictly forbidden as an anti-corruption measure.

Regarding payment, it must be noted that payment may not in any way influence the result of the tax dispute. If the company chooses to pay the additional tax assessment and in the case of a favourable resolution of the dispute, the company is entitled to a refund, interest and inflation rate adjustment. If the company chooses not to pay, the company may seek the suspension of enforcement or will be subject to enforcement measures that are independent from the main tax dispute.

As previously stated, it is usually recommendable to obtain expert reports before the first-instance court, as this will enable the judge to navigate more easily through complex technical tax issues. It is important to obtain such expert report from an independent expert appointed by the court – ie, a judicial expert report, rather than an extrajudicial expert report obtained privately by the company.

Jurisprudence, doctrine and guidelines may all be taken into consideration by the Romanian courts. However, under the Civil Procedure Code, the judges are completely free to assess the cases presented and may disagree with the jurisprudence or doctrine presented – with the notable exception of ECJ jurisprudence, which is mandatory in VAT cases as per the Fiscal Code. Moreover, judges are inclined to consider the OECD international guidelines when presented in transfer pricing cases. Usually, the higher the court, the more likely it is for judges to correctly determine the importance of jurisprudence, doctrine or international guidelines in the context of a broader technical tax argument.

In Romania there is a two-tier jurisdiction system for tax litigation: first-instance court and second or appeal (in Romanian, recurs) court.

Court jurisdiction is determined by the value of the dispute. If the value of the claim is under RON3 million, the first-instance court is the tribunal (there is one in every county of Romania) and the appeal is settled by the upper court – ie, the Court of Appeal (there are 15 spread all over the country). If the value of the claim exceeds RON3 million, the Court of Appeal acts as first-instance court, and the High Court of Cassation and Justice – ie, the Supreme Court of Romania located in Bucharest – acts as appeal court. The appeal decision is final and can only be challenged by way of extraordinary appeals (generally with lower chances of success).

In civil administrative/tax cases the law provides for a specific extraordinary appeal ground – namely, if the courts of law reached a final decision that is in breach of EU law or ECJ jurisprudence, the decision may be revised. In cases of serious procedural irregularities before the first-instance court, the appeal court may decide on a retrial – this implies sending the case back to the first court, which will issue a decision subject to appeal. A retrial may be ordered only once by the appeal court.

There are four main stages of an appeal procedure.

• The written stage: lodging the appeal (it is very important to note that the appeal must be lodged with the first-instance court – otherwise it is null and void). Submitting the statement of defence against the appeal. Submitting the reply to the statement of defence (optional).
• The debates stage: usually, the appeal debates imply one or two court hearings.
• The deliberation stage: the appeal judges take the case under advisement and deliberate.
• The decision-making stage: rendering the solution, which is usually published on the court’s website.

It is also worth noting that, after the solution on the appeal is rendered, the appeal court must draft and communicate its decision to the parties outlining the grounds for its solution within 30 days. In practice, this deadline is rarely observed and is extended by courts with successive 30-day periods.

As a rule, cases are distributed randomly to any panel of judges within the administrative litigation chamber of the court that was notified by the claimant. The first-instance court panels are comprised of one judge, and the appeal court panels are comprised of three. The judges are appointed to different panels independently from the cases presented, by way of internal administrative decisions of the court’s management.

Arbitration and mediation in tax disputes are not covered distinctly by the current legislation and are virtually non-existent in tax controversies.

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Certain acts, if not committed under conditions that would qualify them as crimes according to the law, may constitute contraventions, for which the tax authorities are entitled to apply certain sanctions (especially fines). To be able to apply these contravention sanctions, the tax authorities must establish the commission of a contravention act, and a contravention report must be issued to this effect. The imposition of fines for these contraventions is subject to a statute of limitations of five years from the date the act was committed. Also, if, during a tax audit, findings are made that may constitute elements of a criminal offence, the tax authority is obliged to notify the competent judicial authorities and to cease the tax audit (in relation to the tax liabilities linked) after the notification.

Please see 7.1 Interaction of Tax Assessments With Tax Infringements. In principle, no tax assessment should be issued if there are suspicions of a criminal offence, until the resolution of the criminal proceedings.

Please see 7.1 Interaction of Tax Assessments With Tax Infringements and 7.2 Relationship Between Administrative and Criminal Processes. In principle, tax authorities are bound to inform the criminal investigation bodies whenever they identify a potential risk of criminal offences having been committed by taxpayers. In such cases, the tax audit must be ceased, and no tax assessment should be issued until the resolution of the relevant criminal proceedings.

Tax audits and tax assessments are performed exclusively by the tax authorities, while criminal investigations and proceedings are performed exclusively by criminal investigation bodies and specialised criminal courts of law. Tax litigation cases are settled by civil/administrative courts of law, while criminal offence cases are settled exclusively by specialised criminal law courts.

Payment of the principal tax liabilities established through a tax assessment decision does not result in a reduction of the applied fine. However, a reduction is granted in certain cases and for certain offences, by allowing the taxpayer to pay, within 15 days from the notification of the contravention report, half of the minimum fine provided by the applicable regulation.

The possibility exists under specific Romanian criminal law, with various thresholds and quantum giving rise to certain conditions and possibilities.

All matters pertaining to criminal offences related to taxes are regulated under specific Romanian criminal law.

Romanian tax authorities have limited experience in terms of cross-border tax disputes, with very few cases actually being settled under the relevant DTT/EUAC/Dispute Settlement Directive. The authors have not identified such cases in their practice.       

In principle, both paths can be pursued by a taxpayer. However, in practice, there has often been a reluctance among taxpayers to engage in an amicable procedure (under the provisions of Convention 90/463/EEC or EU Directive 2017/1852), given the rather lengthy duration of these procedures, as well as the behaviour of the Romanian authorities during these procedures (which has most often led to the dismissal of mutual agreement requests or excessive prolongation of the procedure).

Please see 7.8 Rules Challenging Transactions and Operations in This Jurisdiction.

Usually, these international procedures have not reached the national courts, as cases where taxpayers have initiated such files are rare and pertain to particular situations – for example, filing a court claim against the decision of the Romanian authorities dismissing the request to initiate the mutual agreement procedure based on the provisions of the relevant Convention.

Both mechanisms are used in Romania. However, the process of obtaining an advance pricing agreement (APA) is complex and can take between 12 and 18 months, depending on the type of agreement (unilateral or bilateral).

The main stages include the following.

• Preliminary meeting: the taxpayer can request that the tax authority organise a meeting to have a preliminary discussion on the eligibility and any relevant aspects related to the request to be submitted.
• Submission of the request: preparing the request together with the necessary documentation as requested by the law. The payment proof of the applicable fee must also be provided together with the request. Through the request, the taxpayer proposes the solution on the APA.
• Review by the tax authorities: the tax authorities may request additional information or clarification from the taxpayer.
• Negotiation: in the case of a bilateral APA, the process also involves the tax authority from the other jurisdiction.
• The issuance of the project of the solution: the tax authority will communicate the project, and the taxpayer has the right to submit its point of view.
• Issuance of the agreement: the agreement is communicated to the taxpayer, and shall be applicable and mandatory only if the taxpayer accepts the solution.

In general, most tax disputes concern transfer pricing issues, which consistently represent a high level of interest during tax audits conducted by the Romanian tax authorities. Unfortunately, due to the technicality and complexity of transfer pricing matters, adjustments are often made as a result of tax audits. Measures that can help mitigate a potential tax dispute include the proper preparation of transfer pricing documentation and providing all necessary explanations and interpretations from the moment of the tax audit, with the aim of clarifying all issues identified by the tax authorities.

The authors have not dealt with or identified such cases in their practice.

The authors have not dealt with or identified such cases in their practice.

The authors have not dealt with or identified such cases in their practice.

Taxpayers may claim damages caused by unlawful tax deeds that have subsequently been annulled by the courts of law. The authors have not dealt with or identified cases in their practice that have arisen in connection with state aid disputes.

An arbitration clause has only been identified in the double tax treaty (DTT) concluded between Romania and Mexico. The authors have not dealt with or identified cases in their practice in relation to the application by Romania of the indicated provisions.

Please see 10.1 Application of Part VI of the Multilateral Instrument (MLI) to Covered Tax Agreements (CTAs). The vast majority of DTTs concluded by Romania do not contain an arbitration clause.

The authors have not dealt with or identified such cases in their practice.

Romania has implemented the Tax Dispute Settlement Directive in the Romanian Tax Procedure Code.

Please see 7.8 Rules Challenging Transactions and Operations in This Jurisdiction.

Application of BEPS Pillars One and Two continues to be a novelty for the Romanian authorities as well as for taxpayers, so there is little visibility on how they will be applied in the future.

As a matter of principle, all matters related to taxpayer disputes are confidential under the fiscal secrecy rules in Romanian regulations.

In Romania, requests to initiate the mutual agreement procedure are generally made based on the provisions of the Multilateral Convention (for disputed issues related to income or capital obtained in a financial year prior to 1 January 2018) and based on provisions of the Tax Disputes Directive (for disputed issues related to income or capital obtained in a financial year starting from 1 January 2018). Note that although provisions of the Directive allow requests to be made under it for financial years prior to 2018, to the extent that the competent authorities agree, these cannot be applied as the authorities in Romania do not agree.

Usually, taxpayers turn to tax consultants and/or lawyers to obtain assistance services related to the preparation of requests and the completion of these procedures.

There are no costs/fees to be paid to the authorities or to the State in administrative litigation.

Companies in their capacity as claimants in tax disputes are obliged to pay judicial stamp fees and expert fees (if any) in advance. Judicial stamp fees are limited by law to lesser amounts, while expert fees are set by the judge and usually range from EUR500 to EUR5,000, depending on the complexity of the issues presented and the volume of work. Such fees may be requested for refund in part or in full if the taxpayer obtains a positive or only partially positive court decision. No interest is applicable for the refund of judicial stamp fees and expert fees.

Companies may request interest and inflation rate adjustment for amounts paid and refunded by the authorities subsequent to a successful tax dispute. Additionally, companies may claim damages borne in relation to the additional tax assessment – eg, costs with issuing a bank letter of guarantee for the purpose of suspending the enforcement of the additional tax assessment.

In Romania, mediation is a liberal profession, and fees are set freely by authorised mediators. However, one must bear in mind that ADR mechanisms are virtually non-existent in tax disputes.

Providing statistics on tax controversy raises particular difficulties in Romania as there are no specialised tax courts, but rather administrative chambers of general courts that settle tax disputes among other administrative litigation. Thus, there are no official statistics available regarding tax litigation separate from other administrative litigation. Moreover, litigation in general, and tax litigation in particular, is centralised, with almost a third of all litigation being settled in Bucharest.

Presenting statistics on these matters is extremely difficult as the number of lawsuits initiated varies from year to year (being determined by the number of completed tax audits and the results of tax appeals). The same applies to concluded lawsuits, as estimating the moment when a lawsuit is fully resolved is very challenging. This is influenced by many factors related to how certain procedures are conducted (such as tax expertise), as well as the appeals process and the rulings given by the courts (for example, if the second tier of jurisdiction court overturns the first-instance court’s decision and sends the case back for retrial).

Unfortunately, it is not possible to provide percentages or statistics in this regard as the practice is extremely diverse, and court decisions can often be contradictory even in similar cases. Additionally, it depends on the court hearing the case and whether the decision is final, as there is a chance that the rulings may be in complete contrast (for example, the first-instance court may dismiss the court claim but later the second tier of jurisdiction court may admit it).

Key strategic guidelines in a tax controversy include the following:

• present the case to the judge in a clear and concise manner;
• request the participation of a tax expert (if applicable) and the participation of a side expert to the expertise proceedings alongside the court-appointed expert;
• take into account a longer-than-usual duration until final settlement of the case; and
• consider the possibility of appealing to international courts – eg, referrals to the Court of Justice of the European Union or appeal to the European Court of Human Rights.