Evasion of taxes up to €1 million ($1.1 million) will no longer be punished under Romanian law, provided that the offending taxpayer pays up within a month, after President Klaus Iohannis signed the relevant law on Friday.
The Romanian supreme court had earlier approved the controversial measure, which is aimed at recovering large sums in unpaid taxes. The previous upper limit was €100,000.
The Bucharest parliament had passed the amendment shortly before Christmas. It was backed by Prime Minister Marcel Ciolacu's Social Democrats (PSD) and Senate President Nicolae Ciucă's National Liberals (PNL), partners in the ruling coalition.
Two conservative opposition parties brought the law before the court. Iohannis has been criticized for failing to return the law to parliament for renewed debate. This was a course open to him as president, despite the supreme court ruling.
The new law provides for a tax evader to face a reduced jail term in the event of payment immediately before the start of court proceedings. Jail terms of between two and eight years are generally imposed for tax evasion in Romania.
The Romanian state is reported by the Finance Ministry to have lost the equivalent of €2.1 billion through tax evasion over the course of 2023, equivalent to 2.5% of gross domestic product. Half of this amount is due to unpaid value-added taxes.
While the authorities efficiently prosecute tax evasion, recovering the unpaid taxes has proved more difficult. Prosecutor general Alex Florența said recently that the new law aimed to remedy this situation.