If this fall brings new hires for your company, you may want to be aware of some important employment opportunities of which you can benefit this year, and going forward as well. These are Romanian employment rules or opportunities you may not want to miss, if you want to stay competitive in your local market.

We describe and explain below these recent and still applicable opportunities related to Romanian employment and salary taxation, which could be relevant for future hires in your company, such as the 200 lei non-taxable salary raise for employees paid with the minimum gross wage per economy.

1. Save tax costs on 200 lei salary raise for employees hired and paid with minimum gross wage

Those Romanian companies who hire full-time employees and pay them with the Romanian minimum gross wage per economy can still apply the non-taxable 200 lei salary raise. This is a very competitive preferential tax regime that was introduced as of June 1, 2022, but still valid and applicable until the end of the year.

More exactly, Romanian companies who hire new employees to whom they would have paid a gross salary of 2,550 lei per month (i.e. the minimum wage per economy), can add an increase of 200 lei to the monthly salary, without paying any salary taxes on this increase. To apply the (partial) tax exemption, the salary increase should be done from day one of the new hire, meaning that the company can pay directly a gross monthly salary of 2,750 lei.

The salary taxes will apply only to the amount of 2,550 lei of the monthly salary, thus saving tax costs on the difference of 200 lei. Nevertheless, the tax exemption on the salary raise is applicable only until 1 January 2023 (as per the current legislation in force). As of January 1, 2023 the entire salary will be taxed.

2. No salary taxes for employees in construction and agriculture or food production industries

Romanian companies in the field of construction, agriculture and food industries can apply a specific salary tax exemption for their employees. The tax exemption can be applied to all employees in the company, up to a level of the gross salary of 10,000 lei per month. The part of the salary that exceeds this level is taxable as in normal conditions.

The exemptions from salary taxes that are applicable under this scheme are:

  • exemption from the income tax 10% (obligation of the employee);
  • exemption from health insurance contribution 10% (obligation of the employee);
  • decrease of the pension contribution, for normal working conditions (obligation of the employee), with 3.75% (i.e., from 25% to 21.25%);
  • exemption from pension contribution, for special or hard working conditions (obligation of the employer);
  • reduction of the employer’s work insurance contribution (2.25%, obligation of the employer) with 0.27%.

In the same time, applicability of the incentive scheme entails paying salaries of at least 3,000 lei per month. So, those companies who pay the minimum gross salary per economy (2,550 lei) to their employees must increase salaries to a level of at least 3,000 lei/month. The increase of the salaries to at least 3,000 lei is mandatory for the company, even if they choose not to apply the tax exemptions described above.

The incentive scheme described above can be applied only by those companies who carry out their economic activities in certain sectors from construction, agriculture and food production industries, and who generate at least 80% of their revenues from at least one of these sectors.

3. Meal tickets maximum value increased to 30 lei/day

As per the Romanian law, companies can grant meal tickets to their employees which can be used to purchase food or pay for meals in restaurants. Recently, the meal tickets maximum value was increased to 30 lei per work day. According to the Romanian tax law, meal tickets benefit of a preferential salary tax treatment: they are exempt from mandatory social contributions (health and pension contributions, which sum up to 35% of the value of the benefit), and are subject only to the income tax (10%).

This maximum value is valid as of June 1, 2022, and will continue to be valid in the first two months of 2023 (i.e., February and March), until it will probably be slightly increased again. You also have to take into account that the value of 30 lei is a maximum one, and not a fixed one. So, employers can also grant meal vouchers whose individual value is below this maximum.

Employers should be aware that employees can benefit of only one meal ticket per work day during a month.

4. Employees working remotely can benefit of a non-taxable monthly allowance of up to 400 lei

For all employees working remotely, the Romanian Tax Code offers a tax exemption on any allowance that is paid by the employer for covering for home office expenses, such as internet subscription, office furniture, etc. The allowance is exempt from income tax and mandatory social security contributions within a limit of 400 lei per month (the amount must be granted proportionally to the time the employee actually works remotely).

Actually, those who sign contracts with employees working remotely must be aware that the company has the legal obligation to cover for expenses the employee incurs in his remote work. Also, the employment law provisions regulating remote work obliges employers to stipulate in the contracts how these expenses are covered.

5. Current personal tax deduction rules will be amended, so more employees can benefit of it

The last important opportunity concerns personal tax deductions applicable to salaries. Starting with the salary income related to January 2023, the current system of granting personal tax deductions for employees will be completely revised, according to officials.

This revision entails that more employees will benefit from a personal tax deduction on their salary income. As of 2023, personal tax deductions for salary may also apply to non-resident employees who work temporarily in Romania.

The government is also planning to give an additional personal tax deduction to young employees and to those who have children enrolled in daycare, kindergartens or schools.

Now that you know of these employment opportunities, check which one you could apply in your company, to stay competitive in the market.

Author

Lawyer

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