Situation: An authorized natural person (PFA) received 41.5% of technical unemployment and assistance last year after returning from technical unemployment.
What is the tax treatment of these allowances?
Solution:
Regarding the monthly allowance of 75% of the average gross earnings provided by the Law on the state social insurance budget for 2020 no. 6/2020 granted to professionals, as regulated by art. 3 paragraph (2) of the Civil Code, art. XV of Emergency Ordinance (OUG) 30/2020 specifies in par. (5) that the income tax, the social insurance contribution and the social health insurance contribution are due, in the quotas provided in Law 227/2015 on the Fiscal Code, with the subsequent amendments and completions.
Moreover, according to art.XV, para.(7) and (8) of the Emergency Ordinance (OUG) 30/2020, Calculation of the fiscal obligations provided in paragraph (5), in the case of the monthly allowance provided in paragraphs (1), (1 ^ 1) and (4), except for the one benefiting the persons who have concluded individual labor agreements based on the Law no. 1/2005, republished, with the subsequent modifications, is performed by the beneficiary natural persons by applying the quotas provided in art. 64 paragraph (1), art. 138 letter a) and, respectively, art. 156 of Law no. 227/2015, with subsequent amendments and completions, on the gross allowance received from the county payment and social inspection agencies, respectively of the Bucharest municipality.
For the calculation of the income tax, the rules provided in art. 78 paragraph (2) letter b) of Law no. 227/2015 apply, with the subsequent modifications and completions.
The mentioned fiscal obligations are declared by the single Declaration regarding the income tax and the social contributions due by the natural persons and are paid by the beneficiary natural persons within the term provided in art. 122 paragraph (1) of Law no. 227/2015, with the modifications and subsequent completions, for the incomes realized in 2020.
Thus, for the technical unemployment indemnity, income tax, CAS and CASS are due in the quotas provided by the Fiscal Code, and for the calculation of the income tax, the rules provided in art. 78 paragraph (2) letter b) of the Fiscal Code are applied, the fiscal obligations being the object of the declaration in the Single Declaration distinct from the incomes from the independent activity.
Therefore, the income tax is determined by applying the rate of 10% on the basis of calculation determined as the difference between the gross income and the social insurance contribution of 25% and the social health insurance contribution of 10%.
Regarding the monthly allowance of 41.5% of the average gross salary provided by the Law of the state social insurance budget for 2020 no. 6/2020, which benefits, in case of reduction of working time, professionals, as regulated by art. 3 para. (2) of the Civil Code, art. 3 paragraphs (3) and (4) of Emergency Ordinance (OUG) 132/2020, it is specified that income tax, CAS and CASS, are due in the quotas provided in Law no. 227 / 2015, with the subsequent modifications and completions, or according to the specific regulations, in the case of the insured professionals in their own social insurance systems.
The Civil Code, art. 3 paragraphs (3) and (4) of Emergency Ordinance (OUG) 132/2020, specifies that income tax, CAS and CASS, are due, in the quotas provided in Law no. 227/2015, with subsequent amendments and completions, or according to specific regulations, in the case of professionals insured in their own social insurance systems.
The fiscal obligations related to the indemnity of 41.5% are declared by the single Declaration regarding the income tax and the social contributions due by the natural persons and are paid by the beneficiary natural persons at the term provided in art. 122 para. (1) of Law no. 227/2015, except for the persons who have concluded individual labor agreements based on Law no. 1/2005, republished, whose fiscal obligations are declared, withheld and paid by the cooperative society, through the declaration regarding the obligations to pay the contributions social, income tax and the nominal record of the insured persons, at the terms provided in art. 147 para. (1) of Law no. 227/2015, with subsequent amendments and completions.
Therefore, the indemnity is subject to income tax, CAS and CASS, in the quotas provided by the Fiscal Code or according to the specific regulations, in the case of professionals insured in their own social insurance systems. The fiscal obligations are to be declared by the single Declaration regarding the income tax and the social contributions due by the natural persons and are paid by the beneficiary natural persons at the term provided in art. 122 para. (1) of the Fiscal Code, respectively until May 25, inclusive of 2021 for the incomes realized in 2020.
At the same time, art. XIX para. (1) of Emergency Ordinance (OUG) 226/2020 specifies that the allowances granted according to art. XV par. (1), (1 ^ 1), (2) and (4) of Emergency Ordinance (OUG) 30/2020 for the modification and the completion of some normative acts, as well as for the establishment of some measures in the field of social protection in the context of the epidemiological situation determined by the spread of the SARS-CoV-2 coronavirus, approved with modifications and completions by Law no. 59/2020, with subsequent completions, and art. 3 of the Government Emergency Ordinance no. 132/2020 on support measures for employees and employers in the context of the epidemiological situation caused by the spread of SARS-CoV-2 coronavirus, as well as to stimulate employment growth, approved with amendments and completions by Law no. 282/2020, do not constitute income from the activity, and for these the following rules apply, as the case may be:
the calculation of the income tax and of the obligatory social contributions is made separately from the incomes realized from the development of the activity;
are not taken into account when verifying the inclusion in the limit provided in art.69 para.(9), art.148 paragraph (2) and art. 170 paragraph (2) of Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions
by derogation from the provisions of art.121, art.151 and art.174 of Law no.227/2015, with subsequent amendments and completions, are not subject to the granting of the bonus established by the annual law of the state budget
Therefore, PFA will not consider the technical unemployment indemnity and the indemnity of 41.5% granted in accordance with the provisions of art. XV paragraph (1) of Emergency Ordinance (OUG) 30/2020 and art. 3 of Emergency Ordinance (OUG) 132/20202 as income from the development of the activity and will perform the calculation of the income tax and of the obligatory social contributions separately from the incomes realized from the development of the activity.
Completion of the Single Declaration (according to the models offered by ANAF):
Regarding the completion of the Single Declaration, for the two types of incomes that are the object of the analysis, PFA will fill in Chapter I. Data regarding the income tax and social contributions due to the following sections:
Section I.5 Data regarding the indemnity provided in art. XV paragraphs (1), (1 1) and (4) of the Government Emergency Ordinance no. 30/2020
The table is completed for each month for which the allowance was collected, as follows: Col. 2 Gross indemnity received – the gross indemnity received is entered for each month;
Col. 3 Social insurance contribution due, in the public pension system – the social insurance contribution determined by applying the contribution quota of 25%, provided in art. 138 of the Fiscal Code, on the gross indemnity received (col. 2);
Col. 5 The social health insurance contribution due – is completed with the value resulting from the application of the contribution quota of 10%, provided in art. 156 of the Fiscal Code, on the gross indemnity received (col. 2);
Col. 6 Income based on the calculation of the tax – the difference between the gross indemnity received (col. 2), the social insurance contribution due, in the public pension system (col. 3) and the social health insurance contribution due (col. 5), according to the provisions of art. 78 para. (2) lit. b) of the Fiscal Code;
Col. 7 Income tax due – enter, for each month for which the allowance was collected, the amount resulting from the application of the 10% tax rate on the income based on the calculation of the tax (col. 6);
Row Total – enter the total fiscal obligations due, according to the law, representing income tax due, social insurance contributions due in the public pension system and social health insurance contributions due, determined by summing the monthly tax obligations;
Section I.6 Data regarding the indemnity provided in art. 3 of the Government Emergency Ordinance no. 132/2020:
It is completed for each month for which the allowance was collected, as follows:
Col.2 Gross received indemnity – the gross received indemnity is entered for each month;
Col.3 The social insurance contribution due, in the public pension system – the social insurance contribution determined by applying the contribution quota of 25%, provided in art. 138 of the Fiscal Code, on the gross indemnity received (col. 2).
Col. 5 The contribution of social health insurance due – is completed with the value resulting from the application of the contribution quota of 10%, provided in art. 156 of the Fiscal Code, on the gross indemnity received (col. 2);
Col. 6 Income based on the calculation of the tax – enter the difference between the gross indemnity received (col. 2), the social insurance contribution due, in the public pension system (col. 3) and the social health insurance contribution due (col. 5), according to the provisions of art. 78 para. (2) lett. b) of the Fiscal Code;
Col. 7 Income tax due – enter, for each month for which the allowance was collected, the amount resulting from the application of the 10% tax rate on the income base of the tax calculation (col. 6);
Row Total – enter the total tax obligations due, according to the law, representing income tax due, social insurance contributions due in the public pension system and social health insurance contributions due, determined by summing up the monthly tax obligations.
1. Section I.7 The summary of the obligations regarding the income tax realized and the social contributions due, established by the current declaration, is filled in automatically, following to be reflected the obligations due thus:
– within subsection I. Obligations regarding the realized income tax, established by the current declaration, at the:
Row 2. Income tax due for the indemnity provided in art. XV paragraphs (1), (1 1) and (4) of the Government Emergency Ordinance no. 30/2020 – the amount representing the total income tax due registered at Row Total from column 7 of the table from Section I.5 Data regarding the indemnity provided in art. XV paragraphs (1), (1 1) and (4) of the Government Emergency Ordinance no. 30/2020, Chapter I of the Single Declaration;
Row 3. Income tax due for the indemnity provided in art. 3 of the Government Emergency Ordinance no. 132/2020 – the amount representing the total income tax due registered at Row Total from column 7 of the table from Section I.6 Data regarding the indemnity provided in art. 3 of the Government Emergency Ordinance no. 132/2020, Chapter I of the Single Declaration;
Row 4. Total income tax due (Row 1 Row 2 Row 3) – enter the total income tax due determined by summing the obligations entered in Row. 2 and Row 3 and, possibly, Row 1 if PFA also owes income tax from activities independent of the activity;
– within subsection II. Obligations regarding the social insurance contribution (lei), in the rows:
Row 2. The social insurance contribution due for the indemnity provided in art. XV paragraphs (1), (1 1) and (4) of the Government Emergency Ordinance no. 30/2020 – the amount representing the total social insurance contribution due in the public pension system, registered at Row Total from column 3 of the table from Section I.5 Data regarding the indemnity provided in art. XV paragraphs (1), (1 1) and (4) of the Government Emergency Ordinance no. 30/2020 of the Single Declaration;
Row 3. The social insurance contribution due for the indemnity provided in art. 3 of the Government Emergency Ordinance no. 132/2020 – the amount representing the total social insurance contribution due in the public pension system, registered at Row Total from column 3 of the table in Section I.6 Data on the allowance provided in art. 3 of the Government Emergency Ordinance no. 132/2020 of the Single Declaration;
Row 4.Total social insurance contribution due (Row1 Row2 Row3) – enter the total social insurance contribution due determined by summing up the obligations registered in Row 2 and Row 3, and as the case may be, at Row 1 for CAS related to the activity;
– within subsection III. Obligations regarding the social health insurance contribution (lei), in the rows
Row 2 The social health insurance contribution due for the indemnity provided in art. XV paragraphs (1), (1 1) and (4) of the Government Emergency Ordinance no. 30/2020 – the amount representing the total social health insurance contribution due shall be completed, registered at Row Total from column 5 of the table from Section I.5 Data regarding the indemnity provided in art. XV paragraphs (1), (1 1) and (4) of the Government Emergency Ordinance no. 30/2020 of the Single Declaration;
Row 3. The contribution of social health insurance due for the indemnity provided in art. 3 of the Government Emergency Ordinance no. 132/2020 – the amount representing the total contribution of social health insurance due registered in Row Total from column 5 of the table from Section I.6 Data regarding the indemnity provided in art. 3 of the Government Emergency Ordinance no. 132/2020 of the Single Declaration;
Row 4. Total social health insurance contribution due (line 1 line 2 line 3) – enter the total social health insurance contribution due determined by summing the obligations registered in line. 1, Row 2 and Row 3, as appropriate.
Legal basis:
EMERGENCY ORDINANCE (OUG) 30/2020 for the modification and completion of some normative acts, as well as for the establishment of some measures in the field of social protection in the context of the epidemiological situation determined by the spread of the SARS-CoV-2 coronavirus;
EMERGENCY ORDINANCE (OUG) 132/2020 n support measures for employees and employers in the context of the epidemiological situation caused by the spread of the SARS-CoV-2 coronavirus, as well as for stimulating the growth of employment;
EMERGENCY ORDINANCE (OUG) 226/2020 regarding some fiscal-budgetary measures and for the modification and completion of some normative acts and the extension of some terms;
Codul Fiscal (approved by Law no. 227/2015, published in the Official Gazette no. 688 of 10.09.2015), with subsequent amendments and completions.