Personal deductions from 2023 – important issues

We remind you that in the Official Gazette (Part I) no. 716 of July 15, 2022, Government Ordinance (OG) no. 16 was published for the amendment and completion of Law no. 227/2015 on the Fiscal Code, the repeal of some normative acts and other measures financial-fiscal. The normative act regulates the calculation method of the basic personal deduction.

According to the Fiscal Code, Romanian resident natural persons, domiciled in Romania, in the case of income obtained from any source, both from Romania and outside Romania, non-resident natural persons who meet the residency condition have the right to deduction from the net monthly income from salaries of an amount in the form of a personal deduction, granted for each month of the taxable period only for income from wages at the place where the basic function is located.

Thus, the personal deduction includes the basic personal deduction and the additional personal deduction and is granted within the limit of the monthly taxable income achieved. The basic personal deduction is granted to natural persons who have a gross monthly income of up to 2,000 lei above the minimum gross basic salary per country guaranteed in payment approved by Government decision, in force in the month of income realization. In the event that, during the same month, several values of the minimum gross salary per country are used, the lowest value of the minimum gross salary per country is taken into account.

For taxpayers who earn monthly gross income from salaries up to the level provided for in the previous paragraph inclusive, the basic personal deductions are established according to the following table:

For taxpayers who earn gross monthly income from wages above the level of a gross monthly income of up to 2,000 lei above the level of the minimum gross basic salary in the country, the basic personal deduction is not granted.

The dependent can be the wife/husband, children or other family members, relatives of the taxpayer or his/her spouse up to the second degree inclusive, whose income, taxable and non-taxable, does not exceed 20% of the monthly gross minimum basic salary per country guaranteed in payment. In the situation where a person is supported by several taxpayers, the amount representing the basic personal deduction is attributed to a single taxpayer, according to the agreement between the parties. For the taxpayers’ minor children, the amount representing the basic personal deduction is attributed to each taxpayer in whose maintenance they are.

Minor children, up to the age of 18, of the taxpayer are considered dependent. The amount representing the basic personal deduction is granted for the dependents of the taxpayer, for that taxable period of the fiscal year in which they were supported.

The period is rounded to whole months in favor of the taxpayer. Individuals who own agricultural and forestry land with an area of more than 10,000 m2 in hilly and lowland areas and more than 20,000 m2 in mountainous areas are not considered dependents.

The additional personal deduction is granted as follows:

a) 15% of the minimum gross basic salary per country guaranteed in payment for individuals up to 26 years of age, who earn up to 2,000 lei more than the minimum gross basic salary per country;

b) 100 lei per month for each child up to the age of 18, if the child is enrolled in an educational establishment, to the parent who earns income from wages, regardless of the level of such income.

If the child is supported by both parents, the additional personal deduction provided for in paragraph 10(b) shall be granted to one of the parents on presentation of the document attesting to the child’s enrolment in an educational establishment and a declaration on their own responsibility by the beneficiary parent.

We specify that by parent, we mean: the natural parent, according to Law no.287/2009 on the Civil Code, republished, as amended, the adopter, the person who has the child/children in care for adoption, the person who has the child in foster care or guardianship, the person designated under Article 104 paragraph (2) of Law no. 272/2004 on the protection and promotion of children’s rights, republished, as amended and supplemented.

If the child is supported by both parents, the additional personal deduction provided for in point b) – mentioned above – shall be granted to one of the parents upon presentation of the document certifying the child’s enrolment in an educational establishment and a declaration on their own responsibility by the beneficiary parent.

 If the parent works for more than one employer, in addition to the documents mentioned above, the parent who benefits from the additional personal deduction provided for in point b) must declare that he/she does not benefit from such deductions from another employer.

The amendment shall apply as from the income for January 2023.

Legal basis:

– Fiscal Code (approved by Law no.227/2015, published in the Official Gazette no.688 of 10.09.2015), with subsequent amendments and additions;

– Tax Procedure Code (approved by Law no.207/2015, published in the Official Gazette no.547 of 23.07.2015), as amended and supplemented;

– Methodological Norms for the application of the Tax Code (approved by HG no.1/2016).