Governmental Order No 16 of 15 July 2022 amending and supplementing Law No 227/2015 on the Fiscal Code

From 18 July 2022

A. The determination of the total turnover and the construction turnover, necessary in determining the right to benefit from specific tax facilities, will be made as follows:

– the turnover actually achieved from the construction activity includes only the income from the activity carried out on the territory of Romania;

– the total turnover shall include both income from activities carried out in Romania and outside 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.

The inclusion in the total turnover of income earned outside Romania affects firms engaged in construction activities both inside and outside the country, which are less likely to benefit from the construction-specific tax benefits.

2. The construction-specific tax facilities are no longer applied in the current year based on the turnover achieved in the previous year. As of July 2022, the tax relief is granted if the construction turnover in 2022 is at least 80% of the total turnover in 2022.

Companies that had a construction turnover in 2021 of more than 80% of their total turnover and did not meet this correlation in 2022 will no longer benefit from the construction tax relief.

3. Allowances for the care of patients with oncological diseases, together with those for maternal risk, maternity, child-raising and care of sick children are also considered as non-taxable income for the calculation of income tax.

Starting with income for August 2022

A. Individuals are no longer exempted from paying income tax on income from wages and salaries, as a result of carrying out their activity on the basis of an individual employment contract concluded for a period of 12 months with Romanian legal entities carrying out seasonal activities among those provided for in Article 1 of Law No 170/2016 on the specific tax on certain activities, during a year.

2. The gross monthly income from salaries and assimilated salaries of natural persons to whom the specific exemption for the construction, agricultural and food industry sectors applies, calculated on a gross salary for 8 hours of work/day of at least 3,000 lei per month, is exempt from income tax. The exemption applies to amounts of gross monthly income up to and including 10,000 lei obtained from wages and salaries. The part of the gross monthly income exceeding 10,000 lei does not benefit from tax relief, as it is taxable income when calculating income tax.

3. The social security contribution (25%) and the health insurance contribution (10%) payable by natural persons earning income from wages or equivalent earnings on the basis of an individual full-time or part-time employment contract may not be less than the level of the contribution calculated by applying the rate to the minimum gross basic wage in force in the month for which the contribution is due, corresponding to the number of working days in the month in which the contract was active. These provisions do not apply to individuals in one of the following situations:

a) they are pupils or students, aged up to 26, in a form of schooling, in which case the employer must request supporting documents;

b) they are apprentices, according to the law, up to the age of 18;

c) are disabled persons or other categories of persons recognised by law as being able to work less than 8 hours a day, in which case the employer must request supporting documents;

d) are old-age pensioners in the public pension system, with the exception of old-age pensioners receiving service pensions under special laws/statutes, and those who cumulate their old-age pension in the public pension system with a pension established in one of the pension systems not integrated in the public pension system (in which case the employer must request supporting documents);

e) they receive during the same month income from wages or equivalent earnings on the basis of two or more individual employment contracts, and the cumulative monthly calculation basis is at least equal to the minimum gross basic wage in the country (the application procedure is established by order of the Minister of Finance).

If the social security and health contributions are lower than the minimum wage, the difference is borne by the employer/income payer on behalf of the employee/income recipient.

Here is a comparison for July and August 2022, showing the calculation of the salary for a housekeeper working 2 hours/day at the guaranteed minimum wage:

To pay a housekeeper a salary of 415 lei net for 2 hours/day, the employer pays taxes and duties of 907 lei!

Published by Chamber of Advisors