The Tax Insurance and Procedure Code (TIPC) provides for joint responsibility of a person (a manager or member of the management body of the company), who participates in reduction of the company assets, in the case where the company has liabilities for taxes and social contributions, which National Revenue Agency (NRA) failed to collect.
Anyone, who deliberately makes payments in cash or in-kind from the assets of a legal entity, which owes tax and social contributions, in case these payments present a hidden profit distribution or dividend, or asset ownership is transferred as a gift or at non-market prices, and as a result taxes and social contributions were not paid, then he/she will be responsible for the liabilities up to the performed payments, respectively to the size of the reduction of the assets of the company.
In order for the responsibility of the manager to be engaged, the following elements should be available:
- a reduction in the assets of the company;
- pending liabilities for taxes and social contributions, which have been identified during a tax audit via a tax inspection act;
- the actions of the manager should show intention, i.e. the manager aimed or assumed that his/her actions will lead to impossibility to pay the due social contributions and/or taxes;
- a cause-and-causality connection between the actions (or lack of such) and the impossibility to pay the tax and social contributions should be available
Such responsibility can occur for all types of taxes and obligatory social contributions, due by the company, regardless in what capacity – whether as a tax obliged person (VAT, corporate tax), or as an entity, obliged to withhold and pay the tax or social contribution of third parties (tax on incomes, due obligatory social contributions of employees). The responsibility covers both the principal liability, as well as the delay interest and expenses for collecting the debt.
The respective person – manager or member of the management body – should have performed during the respective period in this capacity – for instance, he/she signed contracts, issued invoices, ordered payments, etc., or participated in the internal company decision-taking process – issued orders, authorized assets disposals, etc.
Even if the individual was already audited for his/her personal taxes and social contributions, the law allows a new audit to be performed because of the fact that he/she (in his/her capacity of a manager) reduced the assets of the company, which owes taxes and social contributions to the budget.
Such type of responsibility can be addressed to more than one person, if the company had more than one manager or members of the management bodies.
The forced enforcement is always firstly obligatory addressed towards to the property of the company and secondly to the property of the manager of the company. Any change in the size of the liabilities automatically reduces their responsibility – in case of full or partial payment, the manager’s responsibility is also fully or partially cancelled. Respectively, cancelling the tax act, which was issued against the main debtor (the company), always cancels the responsibility of the third parties, regardless whether the tax act against the third parties is in force or not. Also, under Art.21, para 1 of the TIPC, the responsibility of the third parties is not cancelled, in case the main debtor cease its legal existence, including in case of bankruptcy.