Constitutional Court of Romania: No prison for €1 million tax evasion

Romania’s Constitutional Court on Tuesday rejected an appeal by two opposition parties seeking the constitutional annulment of legislation that decriminalises tax evasion of less than €1 million, provided the evader pays the amount owed along with a fine.

Justifying their decision, the judges said that in cases involving crimes aimed at illicit gains, the primary objective of the state’s criminal policy should be to “identify and confiscate the assets in question or their value for inclusion in the public budget”.

The law, ruled constitutional on Tuesday, was enacted in December 2023. It was introduced by the leaders of Romania’s ruling coalition: Prime Minister Marcel Ciolacu from centre-left PSD and Nicolae Ciucă from centre-right PNL. They argued that it aims to enhance efforts to combat tax evasion. Opposition parties in Romania filed the appeal.

According to the law, the act is not punishable if, within a maximum period of 30 days from the conclusion of the audit conducted by competent authorities, the damage to the general consolidated budget, up to €1 million, plus a 15% increase, along with interest and penalties, is fully reimbursed.

If the damage is fully reimbursed by the time of the first court hearing, the penalty provided by law for the offence will be reduced by half.

In December 2023, Ciolacu rejected claims that the law exempted nearly all tax evaders from imprisonment. “The decriminalisation of acts does not exist. If a person violates the law, and if they do it again, they go to jail,” the prime minister said.

He added, however, “I’m not interested in incarcerating anyone. I’m concerned about recovering the owed money.”

European Chief Prosecutor Laura Kövesi expressed concerns that this law might hinder cross-border investigations conducted by the European Public Prosecutor’s Office, potentially leading to a breach of Romania’s obligations.

“It’s hard to comprehend how such significant tax fraud could be considered benign enough to evade criminal punishment,” Kövesi told Spotmedia.

(Sebastian Rotaru | Euractiv.ro)