A draft bill amending the General Tax Code (No. UDER110) has been submitted for consideration by the Council of Ministers. The bill introduces the tax settlement agreement (UDER110), a new form of amicable dispute resolution between taxpayers and the tax authority. The draft is open for inter-ministerial review and public consultation until 19 June, with the proposed date of entry into force being 1 January 2028. Below, we examine who may apply for a settlement agreement, when, and on what terms, and how the process may work in practice.
What is a tax settlement agreement?
A settlement agreement is a voluntary arrangement between the tax authority and a taxpayer or tax remitter (including their legal successors) concerning tax arrears.
The settlement agreement does not replace existing measures (e.g. payment relief[1]) but is a supplement to them, applying only to taxes that are classified as central government budget revenue; liabilities owed to local government units and non-tax budgetary liabilities are excluded.
Under a settlement agreement, the parties agree on the correct amount of the tax liability and the terms of repayment of the arrears. The process is always initiated by the applicant. Third parties liable for tax debts are not eligible to apply.
Reduced late payment interest – the key incentive to settle
The rate of reduction depends on when the application is filed:
Late payment interest ceases to accrue from the date the application is filed. No extension fee is charged either.
Tax relief – how does the process work?
An application may be filed from the date on which the tax arrears arise – during an audit or tax proceedings – but no later than the expiry of the time limit for commenting on the evidence gathered. All communication takes place exclusively via the taxpayer’s account on the e-Tax Office platform.
The authority has 30 days to issue a decision either to proceed with the negotiation or to refuse the application.
The negotiation stage is intended to be informal, with the authority free to request documents and arrange meetings to clarify matters. However, if the parties fail to reach an agreement within 3 months, the authority will refuse to conclude a settlement agreement. Once the settlement agreement has been drawn up, the applicant has 14 days to sign or reject it (failure to respond is treated as a rejection). For the agreement to take effect, a tax return, or a corrected return, consistent with the agreed terms, must be then submitted.
What effect can a tax settlement agreement have?
- Termination of the audit and discontinuation of the tax proceedings
- A prohibition on initiating new audits and issuing tax assessment decisions in respect of the matters covered by the settlement agreement
- Exclusion of criminal liability for fiscal offences relating to the arrears in question
- Suspension of the limitation period from the date the application is filed until the conclusion of the settlement agreement procedure
Tax settlement agreement – key limitations and risks
Inadmissibility of a settlement agreement
A settlement agreement is inadmissible where a tax assessment decision has already been issued and anti-avoidance proceedings are pending, where the liability arose from the application of penalty provisions or there is a suspicion of aggressive tax optimisation, or where the applicant has been convicted by a final and binding judgment or criminal fiscal proceedings are pending against them.
Lapse of the settlement agreement
A settlement agreement will lapse automatically in the event of a late repayment, resulting in:
- An obligation to pay interest in full
- Reinstatement of the authority’s right to conduct audits and tax proceedings
- Exposure to criminal fiscal prosecution
Notably, where a settlement agreement has lapsed due to the applicant’s fault, a fresh application in respect of any tax liability may not be filed until an additional period of 3 years have passed.
One-shot rule and non-appealability
A further application in respect of the same liability will not be permitted, irrespective of the reason for which the settlement agreement procedure was terminated. A refusal to enter into a settlement agreement will not be subject to appeal or to review by the administrative courts.
Will taxpayers benefit from the tax settlement agreement?
The draft bill presents a genuine opportunity for the amicable resolution of tax disputes on reduced-interest terms. However, it demands careful preparation, given the one-shot nature of the application, the retroactive consequences of a lapse of the settlement agreement, and the absence of judicial review of a refusal to conclude one.
We therefore recommend monitoring the progress of the legislative process and conducting a preliminary review of any existing tax arrears with a view to taking advantage of this new instrument.
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[1] under Article 67a of the General Tax Code
[2] referred to in Article 200 § 1
