Romania is the only country in the region that does not tax the revenues from salaries of IT employees.
By contrast, Poland is applying a 32 percent tax in the case of IT employees with annual salaries above EUR 20,500, according to an analysis carried out by outsourcing and business consultancy Accace.
The tax exemption on revenues from salaries applicable to individuals who carry out software development was introduced for the first time in Romania in 2001, and later clear eligibility conditions were set.
In 2013, the law was modified to allow the extension of the range of eligible university specializations from 6 to 14.
Analyzing the situation of facilities granted in other countries in the region such as Poland, the Czech Republic, Slovakia, Hungary and Ukraine, Accace found that Romania is the only country in which IT employees benefit from tax exemptions as far as the taxes and social contributions applied to revenues from salaries are concerned.
Compared to Poland and Slovakia, for instance, employees in the IT sector not only do not receive fiscal facilities from the state but also, because they are in the category of the best paid employees at national level, a tax rate of 32 percent, and 25 percent respectively is applied to the revenues they obtain, in case the revenues exceed annual salary revenues of EUR 20,500 and EUR 32,000, respectively, according to the analysis.
“Competition in regional IT is fierce, and the difference lies in the cost of the labor force. For this reason, states in the region get more and more involved in granting facilities for IT companies. Maintaining fiscal facilities in Romania, as well as identifying and offering new stimulants for the IT industry will definitely boost the number of open positions, competitive salaries, as well as fuel the development of the IT sector and attract foreign investments into the national economy,” said Andreea Paun, Payroll Supervisor Accace în Romania.
IT companies save EUR 300/month per each employee
In Romania, in the case of a programmer who is exempt from taxes, who has negotiated a salary of EUR 1,000/month net, the employer has a salary cost of EUR 1,530, compared to EUR 1,822, which would be the total cost, in case the 16 percent income tax is applied.
For an IT employee who does not have to pay taxes, the employer saves EUR 292 per month. According to Accace calculations, for a number of 50 employees, out of whom 35 are exempt from taxes, the company would save EUR 10,220 in total.
“The facility granted by the state to IT employees, meaning the income tax exemption, has a positive impact also on salary taxes owed to the state by the company, which thus benefits from a reduction in the value of social contributions. For instance, for a net salary of EUR 1,000, the contributions owed by the employer are EUR 396, compared to EUR 332, which is what the employer would pay if the employee were exempted from the tax. In total, the employer will owe to the state budget EUR 64 less in social contributions for each employee,” said Paun.