Certain income earned by employees is subject to a cascading limit for final classification as taxable, non-taxable or partially taxable/non-taxable.
- Limit 1 – individual limits per income category
- Limit 2 – the amount of the individual limits is subject to a new limit of 33% of the entry salary which then has to be divided by income bracket
The incomes for which the cascading limits apply are:
- Additional benefits received by employees under the mobility clause – limit 1 – 2.5 times the legal level established for the delegation/removal allowance, by Government decision for staff of public authorities and institutions.
- The cost of food provided by the employer for its own employees, for situations where employees do not receive meal vouchers – limit 1 – up to the maximum amount of one meal voucher/person/day;
- Accommodation and rent for accommodation/living quarters – limit 1 – 20% of the gross national minimum wage;
- The cost of tourist and/or treatment services, including transport during the holiday – limit 1 – one average gross salary per economy;
- Contributions to a voluntary pension fund – limit 1 – 400 euros per person per year;
- Voluntary health insurance premiums and medical services in the form of subscriptions – limit 1 – 400 euros per person per year;
- Amounts granted to teleworkers to support utility expenses at the place where they work – limit 1 – 400 lei per month corresponding to the number of days in the month in which the individual works as a teleworker;
- Subscriptions for the use of sports facilities for the practice of sport and physical education for maintenance, prophylactic or therapeutic purposes – limit 1 – 400 euro per year/person.
If the sum of the income under threshold 1 = 33% of the qualifying tariff salary = non-taxable income.
If the amount of income in threshold 1 > 33% of the basic tariff salary – the difference is taxable income.
The order in which the above income is included in the 33% monthly limit is determined by the employer. The part exceeding this limit is taxable income, which is also included in the basis for calculating social security contributions.