BR Analysis. Account garnishment is difficult to abolish in Romania; the alternative could be the seizure of property

Forbidding or easing the garnishment of the accounts for the tax agency is good news for the taxpayers, but it is a measure difficult to implement in Romania, as the alternative could mean the distraint upon goods and property, tax experts told Business Review.

Romania’s Finance minister, Eugen Teodorovici, said that the garnishment of the accounts of Romanians will be barred by the end of this year.

Teodorovici indicated that he doesn’t want to see anymore Romanians with accounts that are suddenly blocked by authorities.

“This aggressive approach from the government’s side will disappear. This garnishment will disappear. The Romanian will not find his or her account blocked unexpectedly when leaving on vacation abroad and realizes that he or she can’t access the account due to a small amount (to be paid to the state – e.n), somebody blocked all the accounts. This disappears by the end of this year,” he said during an interview at Antena 3.

Other forms of abuse

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But experts warn the garnishment of the accounts could lead to other forms of abuse from the government.

“If the garnishment of the accounts will be eliminated, the other forms of enforcements, namely the distraint upon property or goods, will be implemented with priority. In this case, the chance of recovery is considerably lower,” Dragos Doros, currently tax director at KPMG Romania and a former chief of ANAF, told Business Review.

“Moreover, we may see absurd situations in which, for a small amount, the taxpayer has a distraint upon the house or the car. It can go too far to sell goods for the recovery of a small amount, and the difference is returned to the taxpayer,” he added.

Universal measure

Experts also point out that the garnishment of the accounts is a measure widely used by tax agencies around the world, and difficult to replace.

“Garnishment of the accounts is a fairly universal measure, it is part of continental tax law, and it is not feasible to give it up. (…) The state as a creditor must ensure that it recovers its money,” Alexander Milcev, head of tax & law at EY Romania, told Business Review.

However, the way this measure is applied in Romania could be changed, as it could be a source of abuse against taxpayers.

“It is an unbalanced relationship in favor of the government in relation to the taxpayer,” Milcev indicates.

“You cannot give up all the garnishments of the accounts, but it should be applied in a more balanced way,” he added.

Experts consider that the government could set a minimum amount of tax debt for the garnishments of the accounts and stimulate taxpayers to avoid such extreme measures.