The most important fiscal changes in Romania starting January 1, 2018

Anca Alexe 03/01/2018 | 09:54

The new year comes with new legislation that will affect almost every Romanian citizen as well as the country’s business environment.

The most important changes are the shift of social security contributions from the employer to the employee, the increase of the minimum gross salary to RON 1,900, the reduction of the income tax from 16 to 10 percent, as well as the reduction in the contribution rate to the second (private) pension pillar from 5.1 to 3.75 percent of salary.

As a result of the social security changes, employers are now being pressured (but not obligated) to raise the gross wage of their employees in order for their net incomes to remain unchanged.

Another important change for companies is that those in insolvency or late payers of VAT are required to apply to the VAT split system, and the limit for the income of micro-enterprises has doubled to reach EUR 1 million.

Workers in the IT sector, who until now were exempt from the unique income tax of 16 percent, will not be technically exempt from the new 10 percent income tax, but the government has promised to help their employers pay higher gross salaries in order for the employees’ incomes to remain intact by developing a Government Decision where a RON 300 million will be allocated every year, for three years, to cover the difference in salary expenditure for IT companies.

Persons who pursue independent activities, such as lawyers, journalists, writers, notaries or doctors will pay social contributions at the minimum wage level, as opposed to the level of their actual income as in previous years.

The rate for national health insurance (CASS) is set at 10 percent and will have to be paid by anyone with employee status or who is otherwise required to pay the contribution, and some previously exempt groups now have to pay CASS, for example those who receive incomes from investments or other sources but also receive a salary or pension.

Other important changes in legislation from January 1, 2018 include:

  • Public service employees will receive holiday vouchers of RON 1,450 before November 30;
  • Persons who leave the country for longer than 180 days in a year have to inform the fiscal authority 30 days prior to departure, otherwise risking penalties;
  • The minimum child-raising allowance will increase from RON 1,233 to RON 1,250, and be capped at RON 8,500 per month.
  • Local taxes on land, buildings or cemetery plots for citizens and companies will increase by up to 20 percent in several counties (Suceava, Botosani, Vaslui, Constanta, Bihor, Bacau, Buzau, Arad), as a result of transferring social contributions from employer to employee;
  • Periodical Technical Inspections (ITP) for cars need to be done yearly for cars older than 12 years, and after 3 years for new cars;
  • The electric energy market will be completely liberalized, therefore any household can choose their preferred supplier, regardless of the area of residence.
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