Tax evasion committed by individuals: what risks exist and when it can become a criminal case

Tax evasion is most often associated with companies, directors, fictitious invoices, VAT and double accounting. In reality, liability for tax evasion is not limited to commercial companies. An individual can be criminally investigated if they conceal income, fail to declare taxable sources, use false documents or take part in mechanisms by which obligations owed to the state are avoided.

In recent years, tax inspections have become more detailed, and the authorities have access to more sources of information: bank accounts, tax returns, real estate transactions, income from abroad, online platforms, international data exchanges and electronically transmitted documents. For individuals, the risk no longer arises only in obvious cases of fraud, but also in situations where actual income does not match declared income.

One simple thing must be understood: not every tax mistake amounts to tax evasion. A declaration error, a delay or a misinterpretation of a tax obligation may have fiscal consequences, but does not automatically become a criminal offence. The difference arises when there is an intention to conceal income, avoid paying taxes or create a false appearance through documents, transactions or artificial structures.

What does tax evasion by an individual mean?

Tax evasion by an individual occurs when they evade, intentionally, the payment of tax obligations. In practice, the person obtains income or carries out operations that should be declared, but conceals them wholly or partly in order not to pay taxes, duties or contributions.

This category may include income from independent activities, rent, royalties, dividends, commercial transactions, provision of services, online activities, repeated sales of goods, earnings obtained through digital platforms or income from abroad that should have been declared in Romania.

The most common situations:

Income received "off the books"

Receiving income without declaring it to ANAF or providing services for payment without tax documents.

Undeclared rental income

Renting out properties without declaring the income, especially when there are multiple properties and constant cash receipts.

Fictitious contracts

Using unreal contracts to justify sums or conceal the true source of money.

"Occasional" online sales

Repeated online sales artificially treated as occasional sales, although they have the character of a commercial activity.

Personal accounts for economic activity

Using personal accounts for receipts which in reality relate to an undeclared economic activity.

Crediting the company with unjustified money

Crediting a company with money whose source cannot be justified for tax purposes, or participating in circuits of fictitious invoices.

An individual may act in their own name, as a PFA, as the holder of a sole proprietorship, as a company director or as a person assisting a tax evasion mechanism. For this reason, the analysis does not stop at the legal form, but looks to the economic reality of the operations.

Does Legea 241/2005 (Law no. 241/2005) also apply to individuals?

Yes. Legea 241/2005 (Law no. 241/2005) on preventing and combating tax evasion does not apply only to companies. Several provisions of the law use general terms such as "person", "taxpayer", "suspect" or "defendant", and in certain situations the law expressly refers to the individual.

For example, art. 9 penalises acts committed for the purpose of evading tax obligations. These include concealing an asset or a taxable source, failing to record income earned, recording expenses without real transactions, concealing documents or using double records. These acts may also arise in the case of individuals, especially when income is obtained consistently, in an organised manner or through mechanisms that are difficult to justify fiscally.

Legea 241/2005 (Law no. 241/2005) - Art. 9³, introduced by Legea 126/2024 (Law no. 126/2024)

Crediting with money derived from unrecorded income

Constitutes a criminal offence and is punishable by imprisonment from 3 to 10 years and the prohibition of certain rights, or a fine for the crediting operation carried out directly or indirectly by any individual, with the purpose of making payments with sums of money arising from the omission to record in the accounting books the commercial transactions carried out and/or the income earned by one or more taxpayers.

→ Read the full text of Legea 241/2005 (Law no. 241/2005)

In short

An individual is not shielded from criminal liability merely because they do not act through a company. If there is concealed taxable income or money used in unlawful tax mechanisms, the risk of a criminal case may arise.

From what amount is tax evasion considered to exist for an individual?

The law does not set a minimum amount from which an act becomes tax evasion. There is no general threshold of the type "below this amount it is not a criminal offence". An act may be analysed as criminal even for smaller amounts, if the elements of the offence are met.

However, the value of the damage matters a great deal. It influences the severity of the accusation, the limits of the penalty, the defence strategy and the possibility of benefiting from certain favourable provisions laid down by law.

For the main offenses of tax evasion provided by art. 9 din Legea nr. 241/2005 (Law no. 241/2005), the basic penalty is imprisonment from 3 to 10 years and the prohibition of certain rights, or a fine. If the damage exceeds EUR 500,000, the penalty limits are increased by 3 years. If the damage exceeds EUR 1,000,000, the penalty limits are increased by 5 years.

This means that the amount does not always decide whether an offense exists, but it can decide how serious the case is. Full details about thresholds and penalties can be found in our guide on tax evasion.

Examples of tax evasion committed by individuals

1. Undeclared rental income A simple example is a person who rents out an apartment, collects rent monthly, but does not declare the income and does not pay the tax owed. If the situation is isolated, it may initially be treated as a fiscal matter. However, if there are several properties, constant receipts and a clear intention to conceal, the criminal risk increases. The matter becomes more serious when there are no contracts, the money is collected exclusively in cash, or intermediaries are used to hide the real beneficiary.
2. Provision of services without declaring income An individual may provide consultancy, design, marketing, construction, repair, tutoring, beauty or training services, or other activities, collecting money without declaring the income. If the activity is repeated and has an economic character, it can no longer be credibly presented as occasional help. ANAF may analyse bank accounts, commercial messages, contracts, promotion platforms, payments received, and the difference between declared income and the actual level of expenses.
3. Repeated online sales The occasional sale of personal goods is not the same thing as a constant commercial activity. If a person buys products for resale, sells frequently online, holds stock, promotes the products and repeatedly collects money, the authorities may consider that there is an undeclared economic activity - especially when the income is hidden and the organised activity is presented as a series of personal transactions with no fiscal relevance.
4. Undeclared foreign income Individuals who are tax resident in Romania may have declaration obligations for certain income obtained abroad: self-employed activities, dividends, interest, rent, investments, collaborations, copyright. The fact that the money is received into an account outside Romania does not mean that the Romanian authorities cannot find out about it - the international exchange of tax information (CRS, DAC) has greatly reduced the scope for anonymity. Failure to declare foreign income can lead to a tax audit and, where there are indications of intent, to criminal risk.
5. Lending money to a company that is hard to justify An increasingly relevant case is one in which an individual lends or credits a company with large sums of money but cannot justify their origin. If the money comes from unrecorded income or from hidden commercial operations, the situation may fall within the criminal sphere (art. 9³). The mere existence of a loan agreement does not resolve the matter if there is no real and verifiable explanation of the origin of the money.
6. Use of fictitious documents An individual may also take part in tax evasion by using or providing false documents: fictitious contracts, receipts, invoices without real transactions, false statements, or documents created solely to artificially justify sums of money. In such cases, the risk is not only fiscal - related accusations may also arise, such as forgery of documents and use of forged documents sau money laundering, depending on the context.
7. Concealment of the real beneficiary Sometimes an individual uses other persons, companies or accounts to hide the fact that they are the real beneficiary of the income. For example, receipts are passed through the accounts of relatives, through interposed companies, or through structures that have no real economic role. Where the purpose is to avoid declaring income and evade the payment of taxes, the authorities may look beyond the legal form of the operations.

Tax evasion or a simple fiscal error?

Not every fiscal issue amounts to tax evasion. This distinction is essential.

A fiscal error may occur when a person does not know exactly what their declaration obligation is, fills in a return incorrectly, pays late, or misinterprets a fiscal rule. In these cases, interest or penalties may arise, but not automatically a criminal case.

Tax evasion generally requires intent. The authorities will analyse whether the person wanted to hide the income, whether they used false documents, whether they created a false appearance, whether the conduct was repeated, whether they deliberately avoided fiscal records, or whether they tried to hide the origin of the money.

Elements that may indicate intent:

1. Repeated undeclared receipts
   Systematic conduct spread over long periods is hard to explain as a simple error.
2. Use of cash to avoid banking traces
   Together with the lack of any record of the actual activity, this suggests an intention to conceal.
3. Fictitious contracts and documents created retroactively
   Documents fabricated to justify sums also attract related accusations of forgery and use of forged documents.
4. Artificial splitting of income and use of other persons' accounts
   Splitting receipts between relatives or intermediaries indicates an attempt to stay under the radar.
5. Refusal to provide documents and contradictory explanations
   Conduct during the control matters: unjustified refusal is itself an offence (art. 4), and contradictory explanations regarding the origin of the money weigh heavily.

This is where the defence begins

In such a case, the defence must answer exactly this question: was it an error, a tax ambiguity, or an intentional act of evasion? Contact us for an assessment of your situation.

How is the damage calculated for an individual?

The damage represents the amount that the state budget should have collected and did not, due to the act under investigation. Not every sum received by an individual automatically constitutes damage. For example, if a person received 100,000 lei in undeclared income, the damage is not necessarily 100,000 lei. The damage may be the tax owed, the contributions owed and, as applicable, other related tax obligations.

Depending on the case, the calculation may include:

Income tax

The tax owed for undeclared income, depending on its nature (self-employment, rent, other sources).

Social security and health contributions

CAS and CASS owed when income exceeds the legal contribution thresholds.

VAT

If the activity falls within the scope of VAT and the registration threshold has been exceeded.

Dividend tax

For sums withdrawn from companies under the guise of other operations.

Tax on income from other sources

For gains that do not fall within the classic categories but remain taxable.

Interest and penalties

Where the law requires them for the application of favourable mechanisms for non-punishment or reduction of sentence.

The calculation of the damage must be carefully checked. There may be errors, duplicated amounts, incorrectly calculated periods, income treated incorrectly, or tax obligations applied without analysis of the actual situation.

Specialist expertise - your right

In criminal tax evasion cases, specialist expertise plays an essential role. The person under investigation has the right to participate in the expert examination and to formulate objectives. A specialised lawyer can help challenge an incorrectly calculated damage figure and build a technical defence together with a tax or accounting expert.

What penalties does an individual risk for tax evasion?

For the main offences provided by art. 9 of Legea 241/2005 (Law no. 241/2005), the penalty is imprisonment from 3 to 10 years and the prohibition of certain rights or a fine.

If the damage exceeds 500,000 euros, the penalty limits are increased by 3 years (6-13 years). If the damage exceeds 1,000,000 euros, the limits are increased by 5 years (8-15 years). For certain fraudulent VAT schemes that reduce the state budget's resources by at least 1,000,000 euros, the penalty may be from 7 to 15 years (art. 9²).

In addition to the main penalty, there may be other consequences:

Garnishment and seizure

Precautionary measures are mandatory in tax evasion cases (art. 11): garnishment of accounts, seizure of assets, confiscation of sums.

Prohibition from managing companies

Convicted persons can no longer be founders, administrators, directors or legal representatives of a company (art. 12).

Criminal record and reputation

Problems with the criminal record, damage to professional reputation and risks for family members or business partners involved in the flow of money.

Administrator, shareholder or financier?

For individuals acting as administrator, shareholder, beneficial owner or financier of a company, the case may combine personal liability with an analysis of the company's operations - including related accusations of money laundering, delapidare or, where public officials are involved, bribery.

Can paying the damage stop the criminal case?

Under certain conditions, paying the damage can have significant effects. The law provides mechanisms whereby the act may go unpunished or the penalty may be reduced, depending on the timing of payment, the value of the damage and any additional amounts paid.

For damages of up to 1,000,000 euros, favourable effects may apply if the damage is paid in full, together with the additional percentages, interest and penalties provided by law:

Within 30 days of completion of the control

Full payment of the damage increased by 15%, plus interest and penalties → the act is not punished, and the tax authorities do not notify the prosecutor's office.

During the criminal investigation

Payment of the damage increased by 25% → the act is not punished. In the preliminary chamber or at first instance, the percentage rises to 50%, and on appeal to 100%.

Payment up to the first court hearing

The penalty limits are reduced by half; for damages of up to 1,000,000 € inclusive, the court may apply a fine.

Payment after the first hearing, up to the final judgment

The penalty limits are reduced by one third. Above 1,000,000 €, the non-punishment mechanisms no longer apply.

Warning: payment without strategy may be useless

This area must be analysed quickly. A payment made without strategy may not produce the intended legal effect. It must be verified whether the requested amount is correctly calculated and whether the person meets the legal conditions for the application of the favourable provision - including the condition of not having benefited from these provisions in the last 5 years.

How can an individual be investigated for tax evasion?

The investigation may start through a tax audit, a referral from ANAF, a referral from a bank, a complaint, a denunciation, a company inspection or an analysis of suspicious transactions. The authorities may check:

1. Tax returns and bank accounts
   Returns filed, transfers between individuals, repeated receipts and discrepancies between declared income and actual account turnover.
2. Real estate transactions and significant acquisitions
   Purchases of properties, cars or other valuable assets that are not justified by declared income.
3. Income from online platforms and lease agreements
   Digital platforms report data to the authorities, and lease agreements can be cross-checked with tenants.
4. Income from abroad
   Through the automatic exchange of information (CRS, DAC), foreign banks report the balances and transactions of Romanian tax residents.
5. Links to controlled companies and loans granted to companies
   Capital injections into companies using funds with no tax justification are analysed both at company level and at individual level.
6. Discrepancies between declared income and standard of living
   The indirect reconstitution method: ANAF compares assets and expenses with the income declared during the period under review.

A tax audit can turn into a criminal case

An investigation for tax evasion should not be treated lightly. Even if it starts as a tax audit, it can end up as a criminal case if there are indications of deliberate concealment of income or use of false documents.

What should you do if you are an individual being investigated for tax evasion?

The first step is not to give uncontrolled explanations. Many cases are complicated by hasty statements, contradictory justifications or documents handed over without analysis. It is advisable to:

Speak to a lawyer before making any statement

The first statements can decisively influence how the case develops. Do not sign documents you do not fully understand.

Gather the documents regarding the source of the funds

Bank statements, relevant contracts, evidence of the origin of the sums - these form the basis of the defence.

Check the tax returns filed

Reconstruct what you declared and when, in order to be able to explain any discrepancies coherently.

Do not alter documents after the audit has started

Do not create retroactive documents and do not use artificial explanations - these turn a tax issue into a criminal one.

Check the calculation of the damage

Request a separate analysis of the amount established by the authorities - calculation errors are common.

Work together with a tax expert or accountant

Where the situation requires it, the technical defence is built together with the lawyer and the expert, not separately.

A lawyer specialised in tax evasion can assess whether the act is indeed criminal, whether intent exists, whether the damage has been correctly calculated, whether the evidence was obtained lawfully, and whether there is scope for applying a cause of non-punishment or a reduction of the sentence.

How can Buju, Stanciu & Asociații help you in a tax evasion case involving individuals?

Tax evasion cases involving individuals require a defence built on two levels: tax and criminal. It is not enough to say that the income existed or that the money came from personal sources. The origin of the sums, the reality of the transactions, the absence of intent or the incorrect nature of the authorities' calculation must be demonstrated.

Our business criminal law team can provide assistance with:

Analysis of the tax and criminal situation

Full risk assessment, preparation of the defence before the tax authorities and assistance during hearings.

Verification of the damage

Drafting procedural requests and defences, working together with tax experts and accountants, challenging unlawfully obtained evidence.

Full representation

Negotiating a favourable solution wherever the law allows it; representation during criminal investigation, preliminary chamber, trial and appeal.

Speed matters

The earlier the defence is prepared, the greater the chances of limiting the damage, avoiding mistaken statements and correctly using the legal mechanisms available. Contact us now.

Frequently asked questions about tax evasion committed by individuals

Conclusion

Tax evasion committed by individuals is a genuine legal reality, not merely an extension of company files. Undeclared income, hard-to-justify loans, repeated receipts into personal accounts, fictitious documents and concealment of the source of funds can lead to tax audits and, in serious cases, to criminal cases.

For an individual, the biggest mistake is to treat the situation as a mere administrative discussion, especially when suspicions already exist regarding the source of the money or the non-declaration of income. In such cases, the defence must be built quickly, with documents, coherent explanations and careful verification of the damage.

If you are being checked for undeclared income, amounts introduced into a company, personal transactions or other suspicions of tax evasion, it is advisable to speak to a lawyer before giving statements or signing documents. A correct reaction from the outset can significantly change how the case develops.

Are you being checked for undeclared income?

Whether it is an ANAF audit, a summons from the prosecutor's office or merely suspicions regarding the source of the money - our team offers you a confidential assessment of your situation before you give any statement.

Contact us now