LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXT
This article analyzes the corporate liquidation process in Romania, highlighting its legal, fiscal, and accounting dimensions. Triggered by rising insolvency rates following financial crises and economic instability, liquidation in Romania is governed by Law no. 31/1990 and Law no. 85/2014, aligned...
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University of Oradea Publishing House
2025-07-01
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| Series: | Oradea Journal of Business and Economics |
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| Online Access: | https://anale.steconomiceuoradea.ro/en/wp-content/uploads/2025/07/Kinga-Erzsebet-FULOP-Arpad-Zoltan-FULOP.pdf |
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| author | Kinga-Erzsébet FÜLÖP Árpád-Zoltán FÜLÖP |
| author_facet | Kinga-Erzsébet FÜLÖP Árpád-Zoltán FÜLÖP |
| author_sort | Kinga-Erzsébet FÜLÖP |
| collection | DOAJ |
| description | This article analyzes the corporate liquidation process in Romania, highlighting its legal, fiscal, and accounting dimensions. Triggered by rising insolvency rates following financial crises and economic instability, liquidation in Romania is governed by Law no. 31/1990 and Law no. 85/2014, aligned with EU Directive 2019/1023. The process unfolds through three stages: dissolution, liquidation, and deregistration. Special-purpose financial statements, regulated by Accounting Law no. 82/1991 and the MFP Ordinance 897/2015, must reflect the realizable value of assets and liabilities, moving away from the going concern principle. From a fiscal standpoint, liquidation imposes strict rules regarding the reintegration of reserves and provisions, taxation of asset distributions, and final corporate income tax obligations. Shareholder distributions are treated as investment income, subject to withholding tax for individuals. VAT adjustments are required for distributed assets if input VAT was initially deducted, ensuring neutrality in the tax system. The study also highlights macroeconomic factors influencing corporate failures, with a notable increase in insolvencies among both SMEs and larger companies in 2024. Official data reveal sectoral vulnerabilities in construction, retail, and manufacturing, and regional disparities with Bucharest and major counties registering the highest case numbers. Although preventive concordat procedures gained traction, their low success rate underlines persistent systemic weaknesses. The article emphasizes that liquidation accounting demands meticulous revaluation and classification of all patrimonial elements, careful recognition of revenues and expenses, and accurate distribution of net assets to shareholders. In bankruptcy scenarios, proceeds are distributed proportionally among creditors, with uncovered claims reflected as extraordinary accounting results. Romania’s corporate liquidation system presents a unique blend of transitional legal frameworks, emerging market characteristics, and ongoing EU harmonization. The growing use of digital tools in liquidation procedures suggests modernization trends, but fiscal and regulatory compliance remains critical. This multidimensional analysis offers insights for improving business closure mechanisms, strengthening financial system resilience, and aligning national practices with European standards. |
| format | Article |
| id | doaj-art-56177d0501fb40789dbf937bafbf8034 |
| institution | Kabale University |
| issn | 2501-3599 |
| language | English |
| publishDate | 2025-07-01 |
| publisher | University of Oradea Publishing House |
| record_format | Article |
| series | Oradea Journal of Business and Economics |
| spelling | doaj-art-56177d0501fb40789dbf937bafbf80342025-08-20T03:31:57ZengUniversity of Oradea Publishing HouseOradea Journal of Business and Economics2501-35992025-07-0134113214010.47535/1991AUOES34(1)010LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXTKinga-Erzsébet FÜLÖP0Árpád-Zoltán FÜLÖP1Faculty of Sciences, Sapientia Hungarian University of Transylvania, Cluj-Napoca, Miercurea Ciuc, RomaniaFaculty of Sciences, Sapientia Hungarian University of Transylvania, Cluj-Napoca, Miercurea Ciuc, RomaniaThis article analyzes the corporate liquidation process in Romania, highlighting its legal, fiscal, and accounting dimensions. Triggered by rising insolvency rates following financial crises and economic instability, liquidation in Romania is governed by Law no. 31/1990 and Law no. 85/2014, aligned with EU Directive 2019/1023. The process unfolds through three stages: dissolution, liquidation, and deregistration. Special-purpose financial statements, regulated by Accounting Law no. 82/1991 and the MFP Ordinance 897/2015, must reflect the realizable value of assets and liabilities, moving away from the going concern principle. From a fiscal standpoint, liquidation imposes strict rules regarding the reintegration of reserves and provisions, taxation of asset distributions, and final corporate income tax obligations. Shareholder distributions are treated as investment income, subject to withholding tax for individuals. VAT adjustments are required for distributed assets if input VAT was initially deducted, ensuring neutrality in the tax system. The study also highlights macroeconomic factors influencing corporate failures, with a notable increase in insolvencies among both SMEs and larger companies in 2024. Official data reveal sectoral vulnerabilities in construction, retail, and manufacturing, and regional disparities with Bucharest and major counties registering the highest case numbers. Although preventive concordat procedures gained traction, their low success rate underlines persistent systemic weaknesses. The article emphasizes that liquidation accounting demands meticulous revaluation and classification of all patrimonial elements, careful recognition of revenues and expenses, and accurate distribution of net assets to shareholders. In bankruptcy scenarios, proceeds are distributed proportionally among creditors, with uncovered claims reflected as extraordinary accounting results. Romania’s corporate liquidation system presents a unique blend of transitional legal frameworks, emerging market characteristics, and ongoing EU harmonization. The growing use of digital tools in liquidation procedures suggests modernization trends, but fiscal and regulatory compliance remains critical. This multidimensional analysis offers insights for improving business closure mechanisms, strengthening financial system resilience, and aligning national practices with European standards.https://anale.steconomiceuoradea.ro/en/wp-content/uploads/2025/07/Kinga-Erzsebet-FULOP-Arpad-Zoltan-FULOP.pdfcorporate insolvencyfiscal implicationsaccounting for liquidation |
| spellingShingle | Kinga-Erzsébet FÜLÖP Árpád-Zoltán FÜLÖP LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXT Oradea Journal of Business and Economics corporate insolvency fiscal implications accounting for liquidation |
| title | LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXT |
| title_full | LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXT |
| title_fullStr | LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXT |
| title_full_unstemmed | LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXT |
| title_short | LIQUIDATION OF COMPANIES: ACCOUNTING, LEGAL AND FISCAL IMPLICATIONS IN THE CURRENT CONTEXT |
| title_sort | liquidation of companies accounting legal and fiscal implications in the current context |
| topic | corporate insolvency fiscal implications accounting for liquidation |
| url | https://anale.steconomiceuoradea.ro/en/wp-content/uploads/2025/07/Kinga-Erzsebet-FULOP-Arpad-Zoltan-FULOP.pdf |
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