Analysis: Romanians working in the private sector earn 25 pct less than the Hungarians but 24 pct more than the Bulgarians

Romanians working in the private sectors earn on average EUR 518 net per month, 25 percent less than the average net income in Hungary, but 24 percent more than the Bulgarians, according to Mazars Central and Eastern European Tax Guide 2018.

The study shows that Romanians working in the private sectors have similar net income with the Russians (EUR 519) and the Montenegrins (EUR 512).

In the region, Romanians earn more than the Serbs working in the private sector (EUR 360 net per month), Kosovars (EUR 361), Macedonians (EUR 376), Bosnians (EUR 437) and twice as much as the Ukrainians (EUR 264), but 19 percent less than the Poles (EUR 627), 35 percent less than the Croatians (EUR 805) and 42 percent less than the Czechs (EUR 900).

Significant changes have been introduced in the Romanian tax legislation in the last period of time.

From the 1st of January 2018, approximately 20 percent of the Social Security Contributions have been transferred from the employer to the employee which makes the gross to net salaries to be more transparent, according to Mazars’ experts.

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In addition, the split VAT payment system as introduced in 2017 continues to be applicable however for most business on an optional basis, being mandatory only for taxpayers under insolvency procedures or with outstanding VAT liabilities. Which is intended to improve VAT collection.

The so-called micro-company has become more beneficial as the revenue threshold is increased to EUR 1 million and when having 1 employee the tax on revenue is 1 percent.

“Effective 2018, the Romanian system of social contributions has been completely overhauled. Further, Romania, Croatia and Montenegro each found ways to decrease personal income tax rates,” Mazars points out.

The most important challenge that the CEE region must face in the near future is increasing labour shortages, the experts say.

“How government measures aimed at combatting this problem will impact employment costs remains an open question,” the report indicates.