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Prevention Law or how are the authorities trying to be nice

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The Romanian Government has finally drafted the Prevention Law, which aims to bring education and training to the entrepreneurs. Also, the law will prevent the mistakes that entities do in their activity and to support the business environment.

The draft law has been submitted to the Senate and must be approved by the Parliament. We also wrote about this subject here and here.

So, let’s see what are they up to…

How it works

When the competent authorities make controls to a legal entity, they may observe deeds that according to the law are contraventions. Therefore, they may apply a legal sanction.

Still, the new law states that first the authority will only give a warning along with a redressing plan, which will contain redressing requirements. The requirements must be fulfilled by the entity within a deadline set by the authority, but not more than 90 days.

Furthermore, after the deadline expires, the authority will come for a second control to check the compliance with the plan. If the entity didn’t fulfill the obligations, it will be sanctioned according to the law.

Within a 3 years period, the entity can not benefit again from the legal provisions of the prevention law.

When does the prevention law apply

The provisions of the Prevention Law will apply to situations covered by the legislation in areas such as: fiscal, accounting, labor, electronic commerce, construction works, public administration, copyright, tourism, health, insolvency, consumer’s protection.

As examples, the law applies for the following deeds:

  • failure to publish on the personal internet page the fact that the entity is under the insolvency procedure;
  • failure to bring the land to the initial condition after the completion of the works, and to carry out the cleaning, arranging or rehabilitation, as the case may be, of the site and / or the adjacent lands temporarily occupied during the execution, upon completion of the basic works;
  • failure to notify the date of commencement of authorized construction works;
  • failure to give the book of construction by the investor to the owner, the documentation regarding the design and the documentation regarding the execution, at the reception of the works;
  • failure to complete and to keep the technical book of the construction according to the legal provisions;
  • failure to submit tax returns or late submission of tax returns;
  • failure to correct the defects in products or services or to replace products that do not meet the conditions within the legal term;
  • failure to fully and accurately inform the consumers of the essential characteristics of the products and services offered by economic operators;
  • failure to file at the Trade Register Office the decisions of the general meeting within 15 days, for stock companies;
  • failure to mention in the invoices, tenders, orders, tariffs, prospectus and other commercial documents issued by a company the name, legal form, registered office, trade registry number and unique registration code.

Obligations for authorities

The authorities involved must prepare and offer guides and informing materials and to publish on their sites information regarding:

  • the legislation on contraventions,
  • legal rights and obligations of the authorities in their area and of the entities subject to controls,
  • deeds for which the authorities can apply sanctions and their legal sanctions.

Also, the authorities must guide and offer help to entities for a correct implementation of the legal provisions. In this respect, they must prepare procedures for their employees. Also, they will make public the most frequent situations and their solutions and be helpful for the entities they control.

Moreover, an online portal must be implemented by the central authority. This portal will provide online services and legal resources for a correct information of the public.

Conclusions

Bottom line, the authorities are trying to be nicer with the business environment and with the entrepreneurs.

“The Prevention Law will grow awareness on the legal obligations and will contribute to a better information and communication with the authorities”, they say.

We will be watching the enforcement and will apprise any non-compliance or breach of the law by the authorities.

Uber and Airbnb – are they legal or not?

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As happened in many other countries, companies like Uber and Airbnb are in Romania subject to many discussions regarding the legality of their activity.

Lately, a draft law was submitted to the Romanian Parliament in an attempt to tax the transactions that are being made through these sites.

Basically, the document defines these transactions made through a tech platform as being part of a so-called “access economy”, a term that is also giving the name of the law. As it tries to define some terms like “tech platform”, “supplier” and “customer” and the relations between the suppliers, the draft law talks about an auto-regulating and taxation of the suppliers’ incomes according to the Fiscal Code, where they are legal entities, or according to the regulations regarding the incomes coming from the independent activities, but without being necessary to establish a company, where they are natural persons.

Furthermore, the owner of the tech platform must issue a document stating the transaction which has the value of an invoice and the supplier is obliged to make sure that this happens.

At the end, the law provides the facts that represents offences and the fines for their committing.

The explanatory memorandum of the draft law states that the document comes as a covering for the legislative gap in the “access economy” area by defining this type of economy, clarifying some elementary terms and regulating the rights and obligations of the participants in this type of economy, as well as the rules of taxing the profit. Moreover, this memorandum specify explicitly that this law is meant to regulate transactions that are being made through platforms like Uber, Airbnb and other sites like these ones.

The document was tacitly adopted by the Senate and is now under procedure in the Chamber of Deputies, where it received a favorable appraisal from the Legislative Council, but with some amendments, and a favorable one from the Judicial Commission.

Not only that this law makes it all more confusing, but it does not set procedures for the obligations it regulates and creates a hybrid way of taxation by making some incomes subject to taxation without being necessary for them to be collected by a legal entity and, therefore, to be indicated in an accountancy.

The draft law can be found here .