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Taxes on Salaries in Romania

Updated on Sunday 17th April 2016

taxes_on_salaries_in_romania.jpgWhen you need assistance in paying the taxes on salaries in Romania, count on our accountants' abilities in order to obtain the best results, with no delays in payments or any other issue that may incur when the taxes on salaries are not deposited in accordance to the Romanian rules and regulations.

Our accountants in Romania will provide the best payroll services and, implicitly, full advice and representation regarding the taxes on salaries.

In order to get more information about the taxes on salaries in Romania, we provide you below a brief description about the payment system, the percents withheld and the obligations imputed to both employer and employee in Romania.  

The salary income in Romania is defined as all the income in cash and / or in kind made ​​by a natural person carrying out an activity under an individual contract or a statute specifically provided by law, regardless of the period covered, the name of revenue or the form in which they are granted, including allowances for temporary disability.

The salary income is included in the entire amount of income made by a natural person. In this sense, the Law no. 571/2003 on Fiscal Code provides that any Romanian or foreign person that stands in Romania more than 183 days in a calendar year must pay income tax on income derived from activities performed in Romania or of commercial operations concluded with residents.

Since 2005 it has established in Romania a new way of calculating the income of individuals by the introduction of a flat tax of 16%.

The income tax must be paid by:

- resident individuals domiciled in Romania for incomes from any source;

- resident individuals without domicile in Romania, only for revenues from Romania, which are taxed at the level of each source of income.

In Romania every employee and employer contribute to the social fund, health fund, unemployment fund and to the state budget through payroll taxes.

Monthly payroll tax is a final tax payable by employees, but the law obliges the employer to perform computing operations, retention and payment for the taxes on salaries.

In Romania the income tax is 16%, as provided by the Tax Code.

Social contribution rates and the amount of other taxes are set each year by the Romanian State Social Insurance Budget Law and the Romanian State Budget Law.

In Romania the mandatory social contribution rates for the year 2013 are:

For social insurance contribution:

- 31.3% for normal working conditions, of which 10.5 % for individual contribution and 20.8% for the contribution payable by the employer;

- 36.3 % for difficult working conditions, of which 10.5 % for individual contribution and 25.8 % for the contribution payable by the employer;

- 41.3 % for special working conditions, of which 10.5 % for individual contribution and 30.8% for the contribution payable by the employer,

For health insurance the contribution is represented by:

- 5.5% for individual contribution;

- 5.2% for the contribution payable by the employer;

- 0.85 % for the contribution on holidays and health insurance benefits;

For the contribution to the unemployment insurance budget both parties are taxed as following:

- 0.5 % for individual contribution;

- 0.5 % for the contribution payable by the employer;

- from 0.15 %  to 0.85 % for the contribution of insurance for work accidents and occupational diseases, differentiated by risk class, under the law, due by the employer;

- 0.25 % for the contribution to the Guarantee Fund for salary payment, paid by the employer.

In Romania, the following amounts are not included in salary incomes and are not taxable for income tax purposes:funeral aid, aid for losses in own households as a result of natural disasters, serious and incurable diseases aid, aid for birth, income representing gifts for the employee’s minor children, gifts offered to employees, value transportation to and from the place of employment, cost of benefits for treatment and rest granted by the employer, as provided in the employment contract.

The gifts offered by the employers for the benefit of their employee’s minor children are not taxable for sums that do not exceed 150 RON.

In Romania individuals have the right to deduct from their net monthly salary an amount in the form of personal allowances, paid for each month of the reporting period. The personal allowance may be deducted only for the salary income made at the place of the basic function:

- For taxpayers who have no dependents - 250 RON;

- For taxpayers who have one dependent- 350 RON;

- For taxpayers with two dependents - 450 RON;

- For taxpayers with three dependents - 550 RON;

- For taxpayers who have four or more dependents - 650 RON.

For taxpayers who derive monthly income gross from salary between 1,000.01 RON and 3,000 RON, the personal deductions are descending, as determined by the Romanian Minister of Public Finance.

For taxpayers who derive monthly income gross from a salary which exceeds the sum of 3,000 RON, the personal deduction is not granted.

Even though the employee is charged with taxes, the entire amount is withheld and paid by the employer.

The only exception is for Romanian citizens or foreigners living in Romania whose salary is paid by a diplomatic mission or from abroad. The employees in this situation must submit until the 25th of each month, the Declaration on incomes from salaries derived by foreign individuals operating in Romania and by Romanian natural persons employed by diplomatic missions and consular posts accredited in Romania - the Form no. 224.



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