Latest tax news November 2017
Latest modifications of the Romanian Fiscal Code have been approved by the Government
Last Wednesday (yesterday) the Government approved some major modifications of the Romanian Fiscal Code through a Government Emergency Ordinance (GEO), to be applied as of 01.01.2018.
Taxation of the micro-enterprises
The companies having a turnover less than 1 Mil EUR will be taxed with 1% at incomes, no matter the activities, nature of incomes or value of share capital.
Currently, the micro-enterprises are the companies having a turnover less than 500,000 EUR, are taxed with 3% at the turnover (1% in case they have employees), do not have to have more than 20% of turnover from consulting or management services and can chose to become profit tax payers in case the share capital exceeds 10,000 EUR.
BESP limitations
The GEO introduces the stipulations of EU Directive 2016/1164 for fighting against the externalization of the multinational companies, by severely limiting the tax deductibility of the intercompany loan interest (among other specific measures).
Changes of the social security system
The GEO dramatically change the way the social security taxes are calculated.
Currently, there are three main categories of social security taxes:
– Employer social security taxes, on top of the gross salaries, in amount of 23% of the gross salaries
– Employee social security taxes, taken from the gross salary of each employee, in amount of 16.5% of the each gross salary
– Salary tax, in amount of 16% of the each gross salary decreased with the value of the employee social security taxes calculated above
As of 2018, the social security taxes will be:
– Precautionary work contribution to be paid by the employer, on top of the gross salaries, in amount of 2.25% of the gross salaries
– Employee social security taxes, taken from the gross salary of each employee, in amount of 35% of the each gross salary
– Salary tax, in amount of 10% of the each gross salary decreased with the value of the employee social security taxes calculated above
The consequence of this change is a cca 16% decrease of the net salaries, in case the gross salaries are preserved like in present.
In case the gross salaries are increased in January 2018 to reach the same net salary as in 2017, the total salary expense will be more or less the same like the one of 2017.
Punishing the non-payment of the social security taxes
As the big majority of the social security taxes will be retained from the gross salary of the employees and transferred to the State Budget by the employer, the retaining of them without being transferred will be considered infraction and sentenced with jail, according to the value of the prejudice.
Increasing the minimum gross salary
According to the latest official declarations, the Government will increase the minimum gross salary to 1,900 RON, as of 01.01.2018.