We remind you that the Government Ordinance (OG) no.16/2022 for amending and supplementing the Law no.227/2015 on the Tax Code, published in the Official Gazette no.716/15.07.2022, brought important tax news for PFAs, including the reduction of the limit for the income norm from 100.000 euro to 25.000 euro, but also new rules for the payment of CAS and CASS.
Thus, Authorised Natural Persons (PFA) as well as other categories of taxpayers who obtain income from self-employed activities have a modified tax regime from 2023.
Reduction of the limit for the income rule from €100,000 to €25,000:
From 2023, PFAs will be able to opt for the rule only if their gross annual income is less than €25,000.
Currently, the limit is 100,000 euros.
More precisely, OG 16/2022 provides the following: taxpayers, for whom the net income is determined on the basis of income rules and who in the previous tax year recorded a gross annual income higher than the equivalent in lei of the amount of 25,000 euro, starting with the next tax year are obliged to determine the net annual income in real system.
The exchange rate used to determine the RON equivalent of 25,000 euro is the average annual exchange rate communicated by the National Bank of Romania at the end of the fiscal year.
This category of taxpayers has the obligation to fill in and submit the single declaration on income tax and social contributions due by individuals by 25 May of the year following the year of income.
Thus, if during the year 2023 these PFAs exceed the threshold of 25,000 euros, they will have to switch to the real system starting in 2024.
Therefore, only from 2024 will the new real system apply.
Until then, the same taxation method applies.
CAS changes:
Regarding the CAS, the calculation will differ starting with the income of 2023 in the sense that if the income of the PFA will be between 12 and 24 minimum wages on the economy, then the basis of calculation of CAS can not be less than 12 minimum wages, but if the income is more than 24 minimum wages then CAS will be paid at the equivalent of 24 minimum wages on the economy.
This means that a PFA earning more than 24 minimum wages will have to pay double the current level.
These limit s are referred to the minimum wage of 3.000 lei (HG nr.1447/2022), namely:
Income between 12-24 wages : CAS = 25%* 3.000 lei * 12 = 9.000 lei
Income above 24 salaries : CAS = 25%* 3.000 lei * 24 = 18.000 lei
Thus, those who earn more than 12 gross minimum wages per year from self-employment or intellectual property rights will have to apply the CAS rate to a slightly higher calculation basis:
The basis for calculating the CAS payment is the taxpayer’s chosen income, which cannot be less than:
a) the level of 12 gross minimum wages per country, in force on the deadline for submission of the single declaration, in the case of income between 12 and 24 gross minimum wages per country;
b) the level of 24 gross minimum wages per country, in force on the deadline for submission of the single tax return, in the case of income above 24 gross minimum wages per country.
Please note that the filing of the single tax return for these contributions is not affected by this new threshold of 24 minimum wages, because the obligation to complete the tax return applies from the threshold of 12 gross minimum wages and not from the level of 24.
It is important to point out that, in the case of those who do not submit the declaration, the basis for calculating the CAS will be established by the tax authority ex officio, and will be the value of 12 or 24 gross minimum wages per country, as the case may be, in force at the legal deadline for submitting the declaration for the year for which the contribution is due.
In conclusion, starting with the income for the year 2023, those who earn between 12 – 24 minimum wages (36,000 – 72,000 lei) pay at least 9,000 lei, and those who earn more than 72,000 lei (24 minimum wages) pay at least 18,000 lei as CAS to the Romanian state. The payment deadline will be in 2024.
CASS changes:
Starting from 2023, an individual who earns income from self-employed activities is liable to pay the health insurance contribution if he or she has a cumulative annual income equal to at least 6 gross minimum basic salaries per country from one or more sources of income:
- net income from self-employment,
- income from intellectual property rights,
- income from association with a legal person,
- net income from the transfer of property,
- investment income,
- net income from agricultural, forestry and fish farming activities,
- gross income from other sources, defined according to the Tax Code.
The income to be taken into account is:
a) net/gross income or norm of income from self-employment;
b) net income from intellectual property rights, determined after the flat-rate expenses allowance;
c) net distributed income from associations with legal persons,;
d) net income or income norm, as the case may be, for income from the transfer of the use of goods;
e) income and/or gains from investments. In the case of income from dividends and interest, the amounts received shall be taken into account and in the case of income from dividends, the dividends received and distributed from 2018 onwards shall be taken into account;
f) net income or income norm, as the case may be, for income from agricultural, forestry and fish farming activities;
g) gross income and/or taxable income from other sources.
The contribution to the social health insurance system is due for accumulated income (net income from self-employment, from intellectual property rights, income from association with a legal person, net income from the transfer of the use of goods, income from investments, net income from agricultural activities, forestry and fish farming, gross income from other sources, defined according to the Tax Code) with the exception of income from salaries.
Thus, the Government has introduced the obligation to pay from the level of 6 gross minimum wages upwards – i.e. an injumatation of the level that applied for the income of 2022 and previous years, which was the same as the CAS, i.e. 12 gross minimum wages.
The new calculation basis, from 2023 onwards, to which the 10% percentage applies, has changed as follows:
a) the level of 6 gross minimum wages per country, in force on the deadline for submission of the single declaration, in the case of income between 6 and 12 gross minimum wages per country;
b) 12 gross minimum wages per country, in force on the date of submission of the single return, in the case of income between 12 and 24 gross minimum wages per country;
c) the level of 24 gross minimum wages per country, in force on the deadline for submission of the declaration provided for in Article 120, in the case of income above 24 gross minimum wages per country.
Basically, depending on the size of the income, the CASS will be between 10% of 6 minimum wages and 10% of 24 minimum wages. Those below the six minimum wage threshold will not be obliged to pay CASS, but will be able to do so optionally.
Thus, the obligation to fill in the single declaration for this contribution starts from the minimum of six salaries, and not from 12, and those who do not submit the declaration will be taxed by ANAF, by applying the CASS rate at the level of six, 12 or 24 gross minimum salaries.
In conclusion, those who earn income covered by the single declaration and for which they are obliged to pay CASS will pay for 2023:
- either 1,800 lei, if they earn between 6 and 12 minimum wages (18,000 – 36,000 lei);
- 3,600 lei, if they earn between 12 and 24 minimum wages (36,001 – 72,000 lei);
- or 7 200 lei if they earn more than 24 minimum wages (72 001 lei).
Legal basis:
– Government Ordinance (OG) no. 16/2022 for the amendment and completion of Law no. 227/2015 regarding the Fiscal Code, the repeal of some normative acts and other financial-fiscal measures;
– HG 1447/2022 for the establishment of the minimum gross basic salary for the country guaranteed in payment;
– Fiscal Code (approved by Law no. 227/2015, published in MO no. 688 of 10.09.2015), with subsequent amendments and additions;
– Methodological norms for the application of the Fiscal Code (approved by HG no. 1/2016).