Undeclared and “gray” work, under fiscal authorities` focus RON 2.6 million fines

Starting with mid-March, controls on economic operators will be intensified, according to the National Agency for Fiscal Administration (ANAF). A joint campaign will be conducted with the control bodies of the Territorial Labor Inspectorate (ITM) to identify companies breaking the law. The undeclared work is the main target of the authorities, a phenomenon that affects the state budget, according to an ONV LAW analysis. 

On the other hand, the tax authorities also intend to combat “gray work”, which covers the net remuneration of employees, which is in fact higher than the one stipulated in the financial-accounting documents. 

At the national level, only in the week of February 25 – March 3, 2.642 such controls took place, according to the Labor Inspectorate reports, with a total amount of the fines reaching 2,656,100 lei. The most frequent situations identified by the control bodies were: 

• hiring a person without having signed an individual employment contract; 
• hiring an employee outside the work schedule established in part-time employment contracts; 
• not granting of the weekly rest bonuses, night bonus, lack of compensation with days off or bonus for work performed on public holidays; 
• non-compliance with organizational or hygiene measures to prevent the infection with Sars-Cov-2 virus; 
• lack of review of the risk assessment in the context of infection with the new coronavirus. 

According to the Fiscal Council reports, about 1.4 million people work without legal forms in Romania. The phenomenon is more frequent in sectors such as construction, protection and security services, car service or trade services. 

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“Last but not least, people who carry out activities without legal forms cannot benefit from social protection,” says lawyer Lorena Ciobanu, Partner at ONV LAW. 

The bodies in charge may suspend the economic activity in case they find law infringements. This will still be in effect until the employer proves that he has paid the contravention fine or remedied the deficiencies that led to the activity cessation by concluding an individual employment contract or registration in REVISAL.  

The main recommendations of ONV LAW specialists for employers: 

• Companies must have all documentation well organized, including the personnel files, to be up to date with the records kept and with the fulfillment of the declarative and payment obligations. 
• They must also cooperate with the inspectors, promptly providing the requested information and documents in an orderly and easy-to-understand manner and the responsible staff must be available to provide any necessary explanations. 

• The cordial, benevolent attitude, in order to clarify any noticed aspects, is essential. 

• Also, at the end of the tax inspection action, companies must consider the possibility of formulating an opinion on the conclusions of the inspection or participation in a hearing. 

• If it is considered that any measures or sanctions applied following the inspections are unfounded, the companies must contact the specialists as soon as possible to ensure that the appeal term is respected.