Romanian prosecutors start searches into EUR 6 mln tax evasion ring that cut taxes via insurance contracts for employees

The Police recently started searches in Bucharest and in 26 Romanian counties, trying to dismantle a tax evasion ring, which caused an estimated EUR 6 million damage to the state budget. The Police searched home and headquarters of 112 companies on Tuesday morning (July 9 ), and prosecutors started investigating managers from an insurance company, as well as managers of various firms, all suspected of having created the crime group to withdraw from paying taxes on work contracts. According to prosecutors, the suspects used a novel modus operandi, by concealing parts of the monthly salary rights via life insurance policies, which were then redeemed on a monthly basis. The employer was signing a collective life insurance policy with the insurance company, paying the insurance policy, as well as the monthly premiums, then during the same day or the day after, was using the redeeming clause, while the insurer was paying the insurance premiums directly to the employees' accounts. UPDATE: The insurance company involved in this scheme was BCR Asigurari de Viata, and 21 employees from the insurance firm, including five heads of subsidiaries, are among suspects. The insurance company was taking a 10 percent commission every month, and employees were getting the redeem of their insurance on a monthly basis, while the company was avoiding taxes on the full salary, and was only paying the 10 percent commission to the insurance company. This type of activity caused damages of EUR 6 million to the state budget, over seven months. However, the period when this scheme was used was much longer, dating back from 2009, according to prosecutors. The Police took 44 people for hearings in Targu Mures in this case. editor@romania-insider.com