According to Article 60 point 7 of the Tax Code, individuals are exempt from paying income tax for income from salaries and assimilated to salaries provided for in Article 76 paragraph (1)-(3), for the activity carried out in Romania, until 31 December 2028 inclusive, for which the following conditions are cumulatively met:
- employers who carry out, on the Romanian territory, activities in the agricultural sector and in the food industry defined by the following CAEN codes:
1.CAEN code 01: Agriculture, hunting and related service activities
011 – Growing of non-perennial crops;
012 – Growing of perennial crops;
013 – Growing of plants for propagation;
014 – Animal husbandry;
015 – Mixed farming (growing of crops combined with raising of animals);
016 – Activities auxiliary to agriculture and post-harvest crop activities;
2.CAEN code 10: Manufacture of food products;
- the employers achieve a turnover from the activities referred to in point a) of at least 80% of the total turnover.
For newly established employers, i.e. registered with the trade register/tax registered from June 2022, turnover is calculated cumulatively from the date of registration, including the month in which the exemption applies, and for employers in existence on 1 June 2022, the basis of calculation is the cumulative turnover from the beginning of the year, or cumulative turnover from the date of registration in the case of those established/registered between the beginning of the year and 1 June 2022, including the month in which the exemption applies. For employers existing on 1 January of each year after 1 June 2022, 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, order or other documents specific to the agricultural and food industry sector and covers labour, materials, machinery, transport, equipment and facilities. Turnover will include production realised and not invoiced;
- the gross monthly income from salaries and assimilated to salaries referred to in article 76 paragraph (1)-(3), made by the natural persons to whom the exemption applies, are calculated at a gross salary for 8 working hours/day of minimum 3.000 lei per month. The exemption applies to amounts of gross monthly income up to 10,000 lei inclusive, obtained from salaries and assimilated to salaries provided for in Article 76 paragraph (1) – (3), made by individuals. The part of the gross monthly income exceeding 10.000 lei does not benefit from tax facilities.
Thus, if the employer meets the condition of turnover as mentioned in letter b) above, the employees benefit from tax exemption on income from wages and salaries mentioned in article 76 paragraph (1)-(3) of the Fiscal Code.
Moreover, if the turnover condition is met, employees benefit from the following facilities:
- Exemption from payment of CASS (according to Article 154 paragraph (1)letter (r) of the Tax Code)
- Reduced CAS rate 21,25% (according to article 138^1 and 138^2 of the Tax Code)
Thus, if the employer meets the turnover condition, the income from wages and similar income from wages made under an individual employment contract is due: CAS 21,25% CAM 2,25%.
Individuals who earn income from wages and salaries from employers who carry out activities in the agricultural sector and who meet the requirements of Article 60 point 7 may opt for the payment of 3.75% due to the privately administered pension fund (pillar II).
The option shall be submitted in writing to the employer, who shall withhold the corresponding contribution in accordance with the legal provisions starting with the income of the month following the month in which the option was registered.
If the employee submits this option to the employer, the employer is obliged to withhold CAS at the rate of 25% starting with the salary rights for the month following the month in which the option was submitted.
The condition provided for in Article 60, point 7, letter c) of the Fiscal Code, regarding the gross salary, is considered fulfilled as follows:
- in the case of individual full-time employment contracts, concluded in accordance with the law, the gross monthly income from salaries and assimilated salaries is calculated at a gross salary for 8 hours of work/day of at least 3,000 lei per month. The minimum gross national wage of 3,000 lei per month is set in proportion to the gross basic earnings for an average working time of 167,333 hours per month. For employees who have part-time employment contracts concluded in accordance with the law, tax relief is granted only if the gross basic earnings are set in proportion to the gross basic earnings for a normal working day of 8 hours/day;
- in the case of legal relationships generating income from wages and salaries, other than individual employment contracts, i.e. management contracts, agency contracts and others, concluded in accordance with the law, for which the gross monthly income is not calculated at a gross salary for 8 hours of work/day of at least 3,000 lei per month, tax benefits are granted only if the gross monthly income is at least equal to 3,000 lei; in the case of internship contracts, concluded according to the Law no.176/2018 on internship, with subsequent completions, the tax facilities are granted only if the internship allowance is established proportionally to a gross salary for 8 hours of work/day of at least 3,000 lei per month;
- in the case of apprenticeship contracts, concluded according to the law, the tax facilities are granted only if the basic monthly salary, provided for in the apprenticeship contract, is established proportionally to a gross salary for 8 hours of work/day of at least 3,000 lei per month;
- in the case of employment relationships concluded with day labourers, by agreement of will of the parties, without a written agreement, the tax facilities are granted only if the gross remuneration received for the activity performed by day labourers, according to the law, is established proportionally to a gross wage for 8 hours of work/day of at least 3,000 lei per month;in the situation in which an individual realizes income, based on several legal relationships generating income from salaries and assimilated to salaries such as individual employment contract, mandate contract, management contract and the like, concluded according to the law, in the same month, with the same employer, in order to grant tax benefits, it is first verified whether each legal relationship complies with the condition provided for in Article 60 point 7 letter c) first sentence of the Tax Code, i.e. whether the gross income is calculated at a gross salary for 8 hours of work/day of at least 3. 000 lei per month, in the case of individual employment contracts, or if the gross monthly income is at least equal to 3,000 lei, in the case of other types of contracts. For the granting of tax relief, income from legal relationships that meet the 3,000 lei reporting condition is cumulated. In this case, the tax benefits are granted for income from salaries and similar salaries that do not exceed the threshold provided for in Article 60, point 7, letter c) of the Tax Code. For the part that exceeds this ceiling, tax benefits are not granted.
For monthly income from wages and salary assimilated to wages, made under an individual employment contract, less than 3,000 lei/month, the tax benefits are granted only if the minimum gross basic salary per country guaranteed in payment established in money, not including allowances, bonuses and other allowances, is at least 3,000 lei per month, for an average working schedule of 167,333 hours per month.
We mention that tax facilities are granted for the activity carried out in Romania, including individuals seconded on the territory of Romania, if the income payer to whom they are seconded carries out activities in the agricultural sector and meets the conditions provided for in Article 60, point 7, of the Tax Code.
Attention! Tax facilities are not granted to individuals who are detached out of Romania.
Legal basis:
– Fiscal Code (approved by Law no.227/2015, published in the Official Gazette no. 688 of 10.09.2015), as amended and supplemented;
– Methodological Norms for the application of the Tax Code (approved by GOVERNMENT DECISION no.1/2016);
– MF Order 1525/2022 on the establishment of the procedure for granting tax facilities in the agricultural sector and in the food industry.