In 2023, tax relief for the construction sector is maintained, but on condition that the minimum wage is one third higher than the current one. Of course, firms in the sector do not have the option of raising the wage – they are obliged to. Moreover, the government has decided to restrict the scope of these facilities to employment contracts only.
Thus, in the construction sector we have, from 2023, the highest minimum wage in force: 4,000 lei, one third higher than the one established and granted in the last two years. Thus, starting with the income of January, the minimum wage in the construction sector, i.e. in the case of companies that have employees working in one of the activities listed by CAEN codes in Article 60 point 5 of the Tax Code, is 4,000 lei, regardless of whether the income from these activities is not very high or zero in some months and regardless of whether or not employers are eligible for tax benefits (tax exemption, health contribution and application of a reduced rate of pension contribution – 21.25%).
By OG no. 16/2022 it was decided that, starting from 1 January, the scope of application of the fiscal facilities will be limited only to employment contracts and not to other similar relationships, such as agency contracts, day labourers, apprentices, etc., but also to the activity performed in Romania only.
Construction payroll – legal regulations:
According to OUG 168/2022. (MO 1186/09.12.2022), article XLI, by derogation from the provisions of article 164 paragraph (1) of Law no.53/2003 – Labour Code, republished, with subsequent amendments and additions, starting from 1 January 2023 for the construction sector, the minimum gross basic salary guaranteed in payment is set in money, not including allowances, bonuses and other allowances, at the amount of 4,000 lei per month, for a normal working hours of 165.333 hours per month, representing an average of 24.194 lei/hour.
In the period from 1 January 2023 to 31 December 2028, for the construction sector, the minimum gross basic wage guaranteed in payment will be at least 4,000 lei per month, not including allowances, bonuses and other allowances, for a normal work schedule of 165.333 hours per month on average.
The above provisions apply exclusively to the areas of activity provided for in Article 60, paragraph 5 of Law no. 227/2015, as amended and supplemented.
Non-compliance with these provisions by companies constitutes an offence and is sanctioned according to the provisions of Article 260 paragraph (1) letter a) of Law no.53/2003 – Labour Code, republished, as amended and supplemented, and involves the cancellation of the granting of tax facilities.
The recalculation of contributions and tax is carried out in accordance with the provisions of Law no. 227/2015, as amended and supplemented.
For the differences in tax liabilities resulting from the recalculation of social security contributions and income tax, interest and late payment penalties shall be charged in accordance with the provisions of Article 173 of Law no. 207/2015 on the Tax Procedure Code, as amended and supplemented.
Conditions for the application of tax facilities in the construction sector:
- employers achieve a turnover from activities provided for by the Fiscal Code of at least 80% of the total turnover;
- the gross monthly income from salaries and assimilated salaries of the natural persons for whom the exemption applies is calculated at a gross salary for 8 hours of work/day of minimum 3.000 lei (in 2022) / minimum 4.000 lei (in 2023) per month;
- the exemption applies to amounts of gross monthly income up to and including 10,000 lei, obtained from wages and salaries.
The application of the tax relief in construction is not made in relation to all the income from employment contracts concluded by the employee, so if the employee obtains income from salaries under 10,000 lei from each employer, and all the other conditions are ticked by the latter, then the tax relief will apply to each employer.
The benefits can also apply to part-time contracts.
Clarifications regarding the calculation of turnover for the construction sector in 2023
Another important aspect refers to a change made also by OG 16/2022, to the turnover requirement. Under the old rules, the determination of the 80% percentage was made, for companies already existing at the beginning of the current year, on the basis of the turnover of the previous year.
The executive has changed the rule so that only the current year’s turnover counts for these companies.
Thus, in relation to turnover in construction, by OG 16/2022 we have the following changes:
- to determine the share of the turnover actually achieved from the construction activity in the total turnover, the indicator turnover actually achieved from the construction activity includes only the revenues from the construction activity carried out on the territory of Romania, and the indicator total turnover includes the revenues from the entire activity carried out on the territory of Romania. The activity carried out on the territory of Romania means the activity actually carried out in Romania for the production of products and services;
- employers shall achieve turnover from the activities referred to in point a) within the limit of at least 80% of the total turnover determined according to the provisions of point b1).For newly established employers, i.e. employers registered with the trade register/registered for tax purposes during the year, turnover is calculated cumulatively from the date of registration, including the month in which the exemption applies, and for existing employers on 1 January of each year, turnover is calculated cumulatively for the corresponding period of the current year, including the month in which the exemption applies.
This turnover is based on a contract or order and covers labour, materials, machinery, transport, equipment, fittings and other ancillary activities necessary for the activities referred to in a). Turnover shall include production realised and not invoiced.
Legal basis:
-OG 16/2022 for amending and supplementing Law no.227/2015 on the Fiscal Code, repealing some normative acts and other financial-fiscal measures;
-OUG 168/2022 on some fiscal-budgetary measures, extension of some deadlines, as well as for the modification and completion of some normative acts;
-Fiscal Code (approved by Law no.227/2015, published in MO no.688 of 10.09.2015), with subsequent amendments and additions.