Recently, after passing the Senate in Romania, the Parliament adopted a last-minute amendment to the Fiscal Code that exempted crypto gains in the country from the 10% income tax, until July 31, 2025, among others.

The law was sent to Klaus Iohannis for promulgation but has been challenged by the Romanian President at the Constitutional Court, earlier this month.

The reason for this challenge is an amendment introduced to the law by the UDMR party that exempts the Baptist Theological Institute in Bucharest from paying a tax assessment issued by ANAF – the National Agency for Fiscal Administration.

Iohannis’ move keeps the entire law in limbo until the Court delivers its final ruling. If the Court decides to reject the challenge, the Romanian President is obligated to promulgate it, and if the Court accepts the challenge, the law will return to the parliamentary process.

The draft law ((including OUG nr.107/2024 for new regulations) had already passed the Romanian Senate earlier ahead of being adopted by the Parliament.

The Law Approves the Ordinance on Fiscal Amnesty

This law reportedly approves the ordinance on fiscal amnesty. However, the fiscal amnesty is not affected, considering that the process carried out under the Government ordinance approved by the law has been already completed.

But, the amendments added to the law in Parliament will only take effect once the law is enacted, notes Profit.ro publication.

Iohannis sent a constitutional challenge to the Constitutional Court on December 20, 2024, regarding the Law approving the Emergency Ordinance mentioned above, for regulating certain fiscal-budgetary measures and complementing certain normative acts, according to the Romanian Presidency, cited by the publication mentioned above.

Presidency Reasons for Sending the Law For Review

The President’s decision to send the law to the Constitutional Court is related to the “cancellation of fiscal obligations” for the Baptist Theological Institute in Bucharest. This is a higher education institution, a private legal entity of public utility. Iohannis’ decision to send the law to the Constitutional Court is that any law must:

• Be drafted according to the Constitution
• Represent the legal act of Parliament
• Express and regulate general social relations

However, according to the Presidency, the law subjected to constitutional review established the legal framework necessary to carry out a legal operation of an “individual nature” which applies to a single specific case related to the Baptist Theological Institute in Bucharest, as mentioned above.

The Law’s Constitutional Contradictions, According to the Romanian Presidency

The Presidency offered the following reasons mirroring law contradictions of the Romanian Constitution:

• Article 1(4) regarding the principle of separation of powers
• Article 61(1) regarding the role of Parliament
• Article 16(2) regarding the Constitution’s provision which states that “no one is above the law”
• Article 147(4) highlighting the obligation to comply with the decisions of the Constitutional Court

According to the law draft, ANAF would be required to cancel payments to the state social security budget with retroactive effect. These payments were the subject of a fiscal audit conducted by the Sector 1 Fiscal Administration at the Baptist Theological Institute in Bucharest in 2017, according to the official notes.

The Presidency says that it’s not clear which amounts the cancellation provisions apply to, nor the specific timeframe already concluded, as no applicable rules were identified for the period before/after 2011-2016.

This is the reason why the Romanian Presidency believes that this legislative intervention doesn’t meet the quality standards required by laws, creating confusion between budgetary obligations and the methods of extinguishing them.

This means that the draft law lacks clarity and needs more refining regarding payment cancellations.

The Baptist Theological Institute in Bucharest (ITBB) and Its ANAF Problems

The amendment mentioned above has been proposed by the UDMR party and it aims to resolve an issue between ANAF and the Institute.

The Sector 1 Fiscal Administration conducted a tax audit at the Institute and as a result issued a 2017 decision, obligating them to pay certain fiscal liabilities, including social contributions owed by employees and employers to the state social security budget.

The Baptist Institute’s argument was also supported by the State Secretariat for Religious Affairs and stated that they have been faithfully and fully compliant with the legal requirements by paying all contributions calculated according to the law to the Pension and Aid Fund of the Baptist Christian Denomination in Romania. However, the ANAF did not accept this argument.

The reason remains unclear, but it might be due to the lack of proper evidence, considering that ANAF dismissed the statement.

A “Paradoxical Situation”

UDMR parliamentarians reportedly argued that the situation created is a paradoxical one. The Baptist Institute if being required to pay the same obligations “twice”, according to them.

They noted that the amounts representing “mandatory social contributions” for employees have been already paid, according to the law and the legally prescribed timeframe.

However, if the Institute does not pay the amounts listed in decision no F-S1 19/27.02.2017 to ANAF, it will accumulate debt in the form of additional fiscal obligations and face enforced collection.

UDMR parliamentarians noted that the only solution to resolve the situation is the explicit inclusion of a legal text of a provision exempting the Institute from the double payment.

They did not mention whether the Baptist Theological Institute in Bucharest had previously sought recourse in Court regarding the matter, and if so, what the outcome was.

The issue should be simple – if the Institute has proof of payment, it should not be required to pay the amount twice by ANAF.

This is the issue that is keeping the Bitcoin and crypto tax exemption in Romania in limbo at the moment until it is clarified. Once the issue is resolved, there’s a high chance that the law will be promulgated by Iohannis, exempting crypto traders from taxes until July 31, 2025.

However, the country has bigger problems at the moment, including the cancellation of the 2024 elections without clear “outside interference” proof, and not respecting the citizens’ votes, among others.