Tax changes in the field of onstruction through Emergency Ordinance (OUG) no. 43/2019

As it is well known, the year 2019 has brought significant changes regarding the taxation of the income from the salaries for the employees who work in companies in the field of construction.  First, according to Emergency Ordinance no. 114/2018, for the period of January 1, 2019- December 31, 2019, for the field of construction, the minimum gross basic salary in the country is 3,000 lei / month, for a normal work program on average of 167,333 hours per month, is representing 17,928 lei / hour.

According to Emergency Ordinance no. 43/2019, the companies in the field of constructions are defined as those companies that have:

  1. the construction activity defined at CAEN code 41.42.43 – section F – Constructions (construction of buildings, civil engineering works or special construction works);
  2. the fields of production of construction materials. It is worth mentioning here that Emergency Ordinance no.. 43/2019 added in addition to the CANE codes according to Emergency Ordinance no. 114/2018 and the following: 2351 – Manufacture of cement, 2352 – Manufacture of lime and plaster, 2399 – Manufacture of other non-metallic mineral products n.c.a.;
  3. 711 – Architectural, engineering and technical consultancy activities. (7111 Architectural activities, 7112 Engineering and related technical consultancy activities).

According to Emergency Ordinance no. 114/2018, fiscal facilities were introduced for employees who made income from salaries and assimilated to salaries, between January 1, 2019- December 31, 2028, to companies in the field of construction. These facilities can be granted if the following conditions are fulfilled, modified by Emergency Ordinance no. 43/2019.

The fiscal facilities imply a reduced rate of Social Insurance (CAS) of 21.25% and an exemption of Health Insurance (CASS) and of the income tax.

Thus, in order to apply the fiscal facilities, the natural persons who make income from salaries and assimilated to salaries must meet the following conditions:

  1. a) their employers are active in the construction sector;
  2. b) their employers make a turnover from the activities mentioned in letter. a) and other activities specific to the construction field, within the limit of at least 80% of the total turnover.

According to Emergency Ordinance no. 43/2019, the turnover is realized on a contract or order basis and covers labor, materials, machinery, transport, equipment, equipment, as well as other auxiliary activities.

At the same time, Emergency Ordinance no. 43/2019 mentions that companies fall into two categories from the perspective of this condition: newly established companies and companies existing on January 1, 2019.

Newly established companies, registered with the Trade Register from January 2019 The turnover is calculated cumulatively from the beginning of the year, including the month in which the exemption applies. If the turnover of constructions from the total turnover is at least 80%, the fiscal facilities in that month shall apply.
Companies existing on January 1, 2019. If the company has accumulated over the previous fiscal year of more than 80% of the turnover of constructions from the total turnover, then the facilities are applied throughout the year.
If the company did NOT achieve a cumulative turnover of more than 80% in the previous fiscal year from the total turnover, then the facilities are applied if the condition of the newly established companies is met.
  1. c) the gross monthly incomes from the salaries and assimilated to the salaries realized by the natural persons for whom the exemption is applied are calculated at a gross salary of employment for eight working hours / day, of a minimum of 3,000 lei per month, so the reporting is made to the employment salary and not to the income crude.
  2. d) the exemption is applied according to the instructions to the common order of the Minister of Public Finance, of the Minister of Labor and Social Justice and of the Minister of Health, and the Declaration on payment obligations of social contributions, income tax and the nominal record of the insured persons is a declaration on their own responsibility for fulfillment conditions for applying the exemption.