Thematic ANAF Controls on Energy Companies – What Can Taxpayers Expect?

Companies operating in the electricity market, obligated to pay an additional contribution to the Energy Transition Fund established in the context of the energy crisis, are currently undergoing thematic inspections by the National Agency for Fiscal Administration (ANAF).

By Angela Borza, Manager, Direct Taxation, Deloitte Romania, and Răzvan Brătilă, Managing Associate, Reff & Associates | Deloitte Legal

During these inspections, authorities are verifying both compliance with the payment obligation and the actual method of calculating the due contribution. This obligation was established in November 2021, but its implementation, including the calculation formula of the contribution, has been modified through several normative acts. It appears that during the inspections, the practice has emerged to apply the most recent calculation method even for the period preceding its adoption.

Specifically, at the end of 2021, a tax on additional income from the sale of electricity above the price of 450 lei/MWh (after deducting certain costs) was established. Starting from September 2022, this tax was transformed, through Government Emergency Ordinance (OUG) 119/2022 amending OUG 27/2022, into a contribution of 100% of the additional income (also calculated differently), payable to the Energy Transition Fund. At the same time, the applicability of this contribution (under a different calculation formula) was extended to other categories of taxpayers engaged in electricity and natural gas trading activities.

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Subsequently, in December 2022, through Law 357/2022 approving OUG 119/2022, the calculation method was once again amended, so that this contribution is only payable for the additional income obtained from the sale of electricity produced and, among other things, with certain cost deductions limited. Therefore, this should be the final calculation formula applicable to the contribution starting from the moment of adoption.

The Significance of Decisions Following Thematic Controls

According to a statement from the Ministry of Finance, in June 2023, ANAF conducted nearly 2,000 anti-fraud controls with fiscal implications quantified at over 2.6 billion lei, of which more than 2.5 billion lei were in the field of electricity.

During the thematic inspections of energy companies, a practice emerged among fiscal authorities to apply the changes that came into effect in the second half of December 2022 (through the Law approving OUG 119) for the calculation of contributions owed for the period of September – November 2022.

As a result of these inspections, no additional payment amounts could be established for the companies in question (given that current legislation does not allow this type of action during thematic inspections). However, the inspection teams issued minutes establishing the deadlines by which taxpayers must submit amended declarations and pay the tax amount provided by Law 357, including for the period prior to its entry into force. Although these minutes are not obligatory for taxpayers, they (together with any viewpoints submitted by the taxpayer) can serve as evidence in a future tax inspection or documentary verification, following which additional payment amounts may be imposed on the respective companies.

From our experience, some taxpayers have submitted amended declarations and paid the additional amounts, while others have submitted viewpoints emphasizing their disagreement with the findings of fiscal authorities, and therefore against the retroactive application of the provisions of Law 357 (which, although more advantageous for many, as it only applies to electricity from own production, allows the inspection teams to also apply the contribution related to trading activities).

Thus, for those who did not comply, it is expected that tax inspections or documentary verifications will be initiated.

However, up to this point, many affected companies have raised serious questions about the application of the most recent contribution calculation methodology, as this new calculation formula provided in Law 357 can only be applied after the moment it came into effect (December 2022). Consequently, it is desirable that the recurring changes in legislation do not lead to an application that affects taxpayers who complied with the existing regulations. If situations of this kind do arise, those affected by such decisions have a series of legal mechanisms to challenge them, with costs that will ultimately be borne by the state budget, in the likely event that the respective decisions are annulled in the contestation procedures.