EC asks Romania to fix taxation of debt collectors

The European Commission (EC), the executive arm of the EU, requested last week Romania to align its rules on the valuation and accounting of purchased debt claims with EU law, with the country risking an infrigement procedure unless it fixes this provision, announced the Foreign Investors’ Council (FIC), the business advocacy group.

According to EU law, as a general rule, items shown in the annual accounts shall be valued using a method based on the principle of purchase price or production costs. But under Romanian accounting legislation, the debts need to be recognized at nominal value.

“This incorrect provision of the Romanian law generated huge tax costs for the debt collection market in Romania,” said the FIC in a statement.

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Unless Romanian authorities comply with EU regulation within two months, the EC may refer the matter to the EU Court of Justice.

The FIC together with others associations such as AmCham and the Association of Commercial Receivables Management (AMCC) have raised this issue in the past two years through position papers and discussions with representatives of the Ministry of Finance.

The FIC said it would be involved in the project until the local accounting legislation is amended.

Ovidiu Posirca