Employer Alert: Important Romania Taxation Changes to Impact Employers and Employees – Effective January 1 2018

Employer Alert- Important Romania Taxation Changes to Impact Employers and Employees - Effective January 1 2018

By Kira Rubiano

There is a major legislative update that will impact employer and employee Romania taxation rates coming into effect January 1, 2018. According to the Emergency Government Ordinance no 79/2017 amending the Law No.227/2015 regarding the Fiscal Code, the following changes will come into effect as of January 1.

Romania Taxation Changes Overview:

• The employee rate of income tax on salary will decrease from 16% to 10%;
• The maximum gross wages for the salary deduction computation will increase from RON 3,000 per month to RON 3,600 per month. Exceeding the gross wage of RON 3,600 , no salary deduction will be granted;

Changes concerning rates for Social Security Contributions are as follows:

Employee Impact:

• Increase to 25% for social security contribution from 10.50%
• Increase to 10% to health fund insurance from 5.50%

Employer Impact:

• New Contribution of 2.25% contribution of “insurers to work” which will cover the unemployment fund, sick holidays and indemnities fund, the labor accidents and professional illness fund, and salaries guaranteed

• The reduction of the income tax from 16% to 10% helps alleviate the impact of the transfer of social contributions from the employer to the employee.


Please contact Celergo for any assistance you may require with payroll in Romania. We are happy to help! A special thank you to Soter and Partners for their expertise in Romania taxation and for their assistance on this article.

 

 

**This article is for informational purposes only. It is not intended to constitute legal advice.

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