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How can employees receive 400 RON a month for working from home

Yes, according to a recently published amendment to Romanian tax law, employees can receive 400 RON a month for expenses related to their home office if they do work from home for their employers.

In this article we briefly explain how the settlement of such expenses works for employees doing work from home, according to the latest changes introduced in the Romanian tax legislation. Denisa Șerban, tax consultant within Nestlers Group, explains this topic and the important associated aspects that Romanian employers need to know.

At the end of 2020, Law no. 296/2020 was published in the Official Gazette on December 18, 2020, which amended the Romanian Tax Code. In the period prior to the publication of this law, there were many discussions in the private sector about employers’ obligation to bear the utility expenses for employees working from home.

Therefore, this law specifies that the amounts granted to employees who carry out their activities from home to support the utility expenses (such as electricity, heating, water and internet subscriptions, the purchase of office furniture and equipment), will not be subject to salary income tax or mandatory social contributions. Also, such expenses will be treated as deductible when calculating the profit tax due at the company level.

The maximum applicable non-taxable threshold that can be paid to employees working from home

Romanian employers should know that this amount must be within a monthly maximum threshold of 400 lei, corresponding to the number of days in the month in which the employee actually carries out activity from home.

To ensure they avoid any risk that these amounts are reconsidered as salary and treated as taxable amounts, we recommend employers put in place relevant internal procedures on this subject (work from home).

Ensuring clear internal procedures to avoid tax problems

In practice, employers need to ensure that there are internal procedures that clearly state how to calculate the amounts, prorated according to the days worked from home, and how to grant these amounts to the eligible employees.

At the same time, if the amount granted by the employer is higher than the one mentioned in the tax law, the difference will have to be treated as income assimilated to salary and taxed as such. Basically, if the employer wants to grant, for example, an amount of 500 RON to support utility expenses for employees, the difference of 100 RON will be subject to salary income tax and social contributions.

The amounts will be granted without the obligation for employees to present supporting documents for the expenses. Therefore, from this perspective it is even more important for the employers to have an internal procedure regulating the granting of such amounts, in the event of a tax authorities audit. The procedure can help in demonstrating how the amounts are calculated for each employee.

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