Everything you need to know about tax evasion

What is tax evasion?

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Tax evasion occurs when a person/company attempts to evade paying

taxes through illegal methods, such as hiding income or ignoring obligations

tax required by law. In these cases, the taxpayer pays less tax than they would

legally because they do not report actual income or other relevant information to the tax authorities.

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What situations can be considered tax evasion?

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According to Article 9 of Law no. 241 we can consider the following facts as tax evasion:

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• concealment of the taxable or chargeable source, i.e. the goods or income that should be taxed or charged;
• the total or partial failure to record in the accounts or other legal documents the commercial transactions carried out or the income realised;
• the recording in the accounts or other legal documents of expenditure which is not supported by actual transactions or the recording of other fictitious transactions;
• alteration, destruction or concealment of accounting records, memories of electronic tax or electronic tax tallying machines or other data storage media;
• keeping double accounting records through the use of documents or other means of data storage;
• refusal to allow financial, tax or customs controls by non-declaration, fictitious declaration or inaccurate declaration of the main or secondary establishments of the persons checked;
• substitution, degradation or disposal of seized property in accordance with the provisions of the Code of Fiscal Procedure and the Code of Criminal Procedure.

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To remember!

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In order to be able to speak of tax evasion, it is necessary to demonstrate an intention to conceal

income or ignore tax obligations imposed by law.

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If some financial records are missing from the accounting records, it is important to

determine why they were omitted. If the documents required for

the recording of tax activities were not created, then we refer to omission. However, if

these documents have been created but not filed with the tax authorities, then this

is another crime, not to be confused with tax evasion.

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How is tax evasion punished?

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• If the taxpayer intentionally sets taxes, duties or contributions lower than those required by law, he or she risks imprisonment for 3 to 10 years and disqualification or a fine. Also, association with such acts can lead to an even higher penalty: 5 to 15 years.
• If a taxpayer intends not to comply with tax obligations, he or she may be sentenced to 2 to 8 years' imprisonment and disqualification or a fine.
• If the damage is fully recovered during the prosecution or trial, but before a final judgment is handed down, a fine of up to €100,000 may be imposed. If the damage is up to €50,000, a fine in the equivalent of the national currency may be imposed.

• If the damage increased by 20% of the base plus interest and penalties is paid in full, the offence is no longer punishable.

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Who is accountable to the law?

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According to the Accounting Act No 82/1991, Art. 10, para. (1), the responsibility for the organisation

and the management of the accounts of the persons referred to in Article 1 shall be the responsibility of the administrator,

the authorising officer or other persons responsible for the management of the unit concerned.

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Furthermore, according to Article 30 of the same law, the annual financial statements must be accompanied by a

a declaration signed by the persons referred to in Article 11(1), stating that they

responsibility for their preparation and confirms that the accounting policies applied

complies with the accounting regulations in force. They also confirm that the financial statements

gives a true and fair view of the financial position and financial performance, and

the activity carried out by the legal person is not endangered by discontinuity.

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To remember!

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• Economic directors, chief accountants or other persons appointed for this function, together with their subordinates, are obliged to comply with and correctly apply the accounting regulations.
• If the accounting is carried out by means of a service contract with authorised natural or legal persons, responsibility for the conduct of the accounting lies with them, in accordance with legal and contractual provisions.
• The directors are directly responsible for the organisation and management of the accounts and for ensuring the accuracy of the financial information presented in the annual financial statements.

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With Banqup, you can manage all your financial documents simply and efficiently.

The platform allows access to tax invoicesinvoices, receipts, contracts and more in a

single place. You can find, store and share documents quickly and easily without

no need to worry about countless papers on your desk.

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That way, you'll save time and be able to focus on growing your business,

leaving your accountants to handle the financials.

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