There is a question that many tax payers in Romania instinctively associate with criminal investigations rather than everyday tax compliance:
“Where did the money come from?”
In Romania, however, this is increasingly becoming a tax question. ANAF personal tax audits are intensifying, with the Romanian tax authorities paying closer attention to individuals whose declared income does not appear to match the total value of their investments, purchases, bank deposits or personal wealth. The latest figures published by ANAF show that this is no longer a limited program targeting only a handful of exceptionally wealthy individuals.
According to official information shared by the authorities, between July 2025 – May 2026, ANAF carried out 1,102 tax audits concerning individuals and raised more than RON 540 million in additional tax liabilities. The authorities also imposed precautionary measures (such as asset seizures or account restrictions, to secure the recovery of potential tax liabilities) in total value of approximately RON 123.5 million.
These figures point to one of the most extensive campaigns conducted in recent years to examine the personal tax affairs of individuals who could not adequately demonstrate the source of the money used for purchases, investments or bank deposits.
For taxpayers, the practical message is simple: having money is not a tax problem in itself. Being unable to reconstruct and document where that money came from can be.
What is ANAF actually looking for in personal tax audits?
ANAF personal tax audits are generally done based on a comparison between the income the authorities have information about and the way in which an individual has used that income or accumulated funds.
In other words, as part of personal tax audits the tax authorities try to build a sort of a balance sheet of the individual.
On one side of that picture are the funds that can be explained: salaries, dividends, rental income, income from independent activities, proceeds from selling assets, inheritances, gifts, bank loans or any income earned abroad. On the other side are the person’s acquisitions and financial movements: real estate purchases, vehicle purchases or other goods of significant value, investments, money introduced into a company, increases in bank balances or other significant expenses.
If, during a given tax period, the second side is materially larger than the first, ANAF may ask the taxpayer to explain the difference.
This does not automatically mean that the person has evaded tax. The money may have a perfectly legitimate source, on which the authorities do not have full visibility. It could come from savings accumulated over many years, a family loan, an inheritance, the sale of property abroad or income earned while the person was resident and working in another country. The real difficulty begins when that explanation cannot be supported with credible evidence.
The transactions most likely to raise questions during a personal tax audit
According to information received from ANAF, recent personal tax audits have frequently identified problems in connection with cash deposits made into personal bank accounts or into the accounts of companies in which the individuals are shareholders. Inspectors have also examined cash used to purchase real estate, cars and other valuable assets, as well as loans provided by shareholders to their own companies.
This last category deserves particular attention.
It is common for Romanian entrepreneurs to finance their companies personally, especially during the early stages of a business or during a temporary cash-flow shortage. From a commercial perspective, this may be entirely reasonable. From a personal tax perspective, however, ANAF may want to establish how the shareholder actually had the financial capacity to provide the money, as well as the source of that money.
A loan agreement between the shareholder and the company is useful as part of a tax inspection, but it does not necessarily answer the central question. The agreement shows the legal basis on which the company received the funds. It does not, by itself, prove the source of those funds and if the money was taxed.
The same issue can arise when an individual participates in a company’s share capital increase or acquires shares in that company. ANAF may compare the amount invested with the person’s previously taxed income and all known financial resources.
Large or repeated bank deposits may also attract attention. The fact that money was deposited into a bank account does not establish its origin. The taxpayer may still need to demonstrate how, when and from whom the funds were obtained.
“I had the money in cash” may not be a sufficient answer
One of the most important lessons from the recent ANAF personal tax audits concerns cash savings.
Taxpayers sometimes explain a property acquisition, an investment or a loan to their company by saying that they had accumulated cash over many years and kept it at home. This is not impossible, nor is holding savings in pure cash unlawful.
But it can be extremely difficult to prove.
The tax inspectors are unlikely to consider the explanation complete simply because the taxpayer signs a statement saying that the money existed. Inspectors may examine whether the person’s previous income made it realistically possible to accumulate those savings. For this, they will also take into account taxes, living expenses and other purchases during the accumulation period.
They may also ask when the cash was obtained, in which currency it was held and how it was subsequently introduced into the economic circuit. The longer the period and the larger the amount, the more important the supporting evidence becomes.
Bank withdrawal records, contracts for the sale of assets, old income statements, tax returns and documents showing the receipt of dividends or other income can help create a credible history of the funds. In practice, a convincing explanation can often be built from several supporting documents that tell the same consistent story.
Family loans and gifts – these may also need to be explained
Another common explanation we hear is that the money was received from a parent, relative, friend or business partner.
Again, the transaction may be completely genuine. However, the tax inspectors may investigate not only whether an agreement exists, but also whether the person who allegedly provided the money had the financial resources to do so.
For example, suppose a taxpayer claims that a relative provided a EUR 200,000 loan for the purchase of an apartment. A loan agreement signed several years earlier may support the explanation, but ANAF could also choose to examine the lender’s income, savings and bank transactions. If the lender had a modest income and no documented savings, the agreement alone may not be persuasive and may generate additional trouble.
Traceability is therefore essential. Apart from a written agreement, ideally the transaction should be supported also by proof of payment of the money and documents demonstrating the lender’s or donor’s financial capacity.
Bank transfers are generally easier to trace than cash. The payment reference, date and identity of the sender can help connect the agreement to the actual transactions.
When substantial amounts are transferred between family members, proper documentation should not be seen as an expression of mistrust. It is just a form of protection for everyone involved. Generally, it is recommended that all transfers exceeding EUR 10,000/item be documented.
Foreign income? The authorities may be able to check it
Foreign income is another source of money which one could claim during a personal tax audit.
An individual may claim that the money they used in Romania was earned abroad. Of course, depending on the circumstances, this may be a valid explanation. However, several separate questions need to be addressed. Given that we speak of foreign source income, the most important is related to tax residency.
Where was the individual tax resident when the income was earned? What type of income was it? Was it declared in the country of source? Did Romania also have the right to tax it? Was the income transferred through a bank, or allegedly brought into Romania in cash?
Tax residency is particularly important when we speak of foreign source income. A person who is tax resident in Romania may have an obligation to report certain categories of worldwide income here, even if the income was paid into a foreign bank account.
At the same time, the mere existence of a foreign bank account does not mean that every amount received in that account is taxable in Romania. The applicable treatment depends on the nature of the income, the person’s tax residence and, where relevant, the double tax treaty concluded between Romania and the other country.
It is important to know that Romanian authorities can obtain information from foreign counterparts through international exchange-of-information mechanisms. In its latest communication, ANAF specifically referred to cases in which taxpayers claimed that funds had been obtained abroad. But their explanations could not be confirmed following exchanges of information with foreign authorities.
For expatriates, returning Romanians and internationally mobile professionals, this makes tax residence documentation especially important. Foreign tax returns, payslips, employment agreements, dividend statements, bank records, sale agreements and tax residence certificates are all relevant in such situations.
What happens if the source of the money cannot be identified?
The tax consequences can be severe.
According to the Romanian tax law, for income identified as part of a personal tax audit and whose source cannot be established the tax authorities can apply a 70% income tax rate. Interest and late-payment charges may be added to the principal tax liability. Depending on the circumstances, other tax penalties may also become relevant.
This means that the financial exposure can be considerably higher than the tax that might have applied if the income had been correctly reported from the beginning. Of course the financial exposure depends also on the amount and the year the money was generated.
It is important, however, to distinguish between income from an unidentified source and income whose source is known, but which was not properly reported and taxed.
During recent controls, ANAF also identified undeclared rental income, income from independent activities, gains from securities, foreign income and other taxable amounts. These categories have their own tax treatment. The 70% rate should not automatically apply just because income was initially omitted from a tax return, if its actual source can be established.
This distinction is one of the reasons why a clear factual and documentary analysis is essential before providing information to ANAF.
The compliance notice from the authorities should not be ignored
Before selecting tax payers for a personal tax audit, ANAF may send a compliance notice informing them that a tax risk has been identified.
As general rule, the recipient has 30 days from the date on which the notice is communicated to reassess their personal tax position. During this period, the individual may review the income generated for the tax period under scrutiny, correct or submit tax returns. If available, they can also provide documents explaining funds that were non-taxable, exempt or otherwise not subject to tax reporting.
The notice may refer to indicators such as real estate acquisitions, vehicles, increases in bank balances, loans granted to companies, capital contributions or investments in securities.
Receiving such a notice does not necessarily mean that ANAF has already reached a final conclusion. It is, however, a serious warning that the information available to the authorities does not fully correspond with the individual’s declared tax position.
Providing a rushed answer could create contradictions. No answer at all could leave the suspected discrepancy unexplained, which could increase number of questions.
A recommended approach would be to reconstruct the financial tax period covered by the notice, determine the tax nature of each significant source of funds and prepare the documents before submitting a response.
Correcting a tax return or submitting a new one may be necessary, but it does not automatically prevent a subsequent audit if ANAF considers that the risk remains unresolved.
