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Mercans CountryIntel ® Romania Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in Romania

One of the most competitive and dynamic economies in the European Union, Romania presents an incredible market opportunity with almost 500 million consumers. Stability and security are two of its biggest strengths. Romania is geo-strategically positioned at the crossroads of three great markets: the EU, the CIS states and the Middle East. Rich in natural resources (such as petroleum, natural gas, salt, coal and gold), Romania has fertile soil which is highly suitable for cereal culture.

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Doing Business in Romania

A friendly business climate, Romania enjoys generous state aid schemes and a competitive tax system with one of the lowest flat taxes. The country is set up to satisfy and support the international business community. Adding further benefit, Romania boasts a highly skilled workforce at competitive prices, with the third lowest minimum wage in the EU.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Romania is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: 9:00 am to 1:00 pm from Monday to Friday

Working Week

The standard working week is from Monday to Friday from 9:00 am - 6:00 pm

Labor Law

Generally, Romanian law will govern employment relationships including where the parties choose Romanian law to govern them and where the employment contract is between a foreign national and Romanian employer and the work is performed in Romania. Where the choice of another law would deprive a foreign national of mandatory protection, Romanian employment law would override it.

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Main Industries

Automobiles, petrochemicals, cement and construction, aircraft, textiles, food and beverages, mining, consumer durables, tourism, metallurgical industry, arms industry

GDP Growth

7.40%

Dates & Numbers

yyyy/mm/dd

Official State Name

Romania

Population

19,081,262

Capital

Bucharest

Major Languages

Romanian

Currency

Romanian leu

Internet Domain

.ro

International Dialing Code

+40

Romania
Bucharest, RO
7:59 am, July 7, 2022
18°C
thunderstorm with rain

Payroll

The minimum gross base salary guaranteed to all full time employees is set by Government Decision every year.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 50 years

Reports

20 days of paid annual leave

Annual Leave

Sick leave is paid at 75% - 100% of the allowance and employees may receive upto180 days of leave

Sick Leave

126 days of paid maternity leave and 5 - 10 days of paid paternity leave

Maternity & Paternity Leave

20 days’ of notice

Employee Termination

No provision

13th month salary

2,350 RON per month

Minimum Wage

Work performed outside the standard eight hour/day can entitle employees to a 75% increase in salary as overtime pay

Overtime

No severance pay is set in Romania unless provided for within the employment contract.

Severance Pay

Tax and Social Security

Romanian citizens living in Romania are considered Romanian tax residents. They are taxed on their worldwide income (except for salary income received from abroad for work performed abroad which is tax exempt) unless they prove through tax residence certificates that they qualify as tax residents of a state with which Romania has concluded a double taxation treaty. Social contributions are due by employers and employees on salary income.

Tax

Although the general rule is a flat personal income tax of 10%, there are exceptions such as the tax rate for dividends, tax rate for income from the transfer of immovable property and the tax rate for income from gambling activities. Companies who operate a multi-country payroll should note that there are no local taxes on personal income in Romania.

16%

Corporate Income Tax

10%

Personal Income Tax

19%

Sales Tax

19%

VAT

Social Security

Contribution rates can be modified by the Social Security State Budget Law, the State Budget law and amendments to the Fiscal Code. The general contributions by the employee are social insurance contribution and health insurance contribution. Employer contributions include social insurance contribution and labor insurance contribution.

37.2%

Social Security Rate

2.2%

Social Security Rate for Employers

35%

Social Security Rate for Employees

Employment Law

Romanian legislation provides a number of benefits to employers for employing people including subsidies, tax exemptions and attractive loan agreements. The law distinguishes between different types of employment statuses such as employees, self employed and independent contractors. The differences between these different statuses concern the degree of independence the worker enjoys, how contractual risk is split between the parties, liability for work and the worker’s place of work.

Employment Agreement

Employment contracts must be done in writing and in the Romanian language. The standard form of agreement is set out by Government Order and contains minimum provisions such as place of work, position, risks of the job, holiday entitlements, base salary and the criteria for assessing performance.

Working condition

Normal working time is 48 hours per week including overtime. This can only be done with the employee’s consent. In exceptional circumstances, the number of work hours can increase provided the maximum reference period of four to six months does not exceed 48 hours per week.

Leaves

The Romanian Labour Code entitles employees to a minimum of 20 working days annual holiday leave. Employees benefit from a holiday allowance which cannot be lower than the salary they would have received for the same period had they worked.

Employment termination

Termination of an employment contract for redundancy must be determined by the elimination of the position. This elimination must be effective, that is it cannot be recreated or renamed. It must also be for real reasons and not done purely to remove an employee. The Romanian Labour Code provisions specify the minimum notice period in the case of dismissals is 20 business days but parties are free to negotiate a higher notice period. There are differences in the dismissal procedures depending on whether it is an individual dismissal or a collective dismissal.

20 days

Minimum notice period for terminating an employee

15 days

Total number of public holidays

40

Working hours per week

3 days

Total number of days for Compassionate & Bereavement Leave

Immigration

EU, South East Europe (SEE) and Swiss nationals can enter and reside in Romania for up to three months – no visas, permits or registrations required. If they extend their stay, a registration certificate must be obtained. Non EU, SEE or non Swiss nationals can work under a work permit (issued by the Immigration Office) and a long stay visa (issued by diplomatic missions or the consular offices).

Residency permits

A long stay visa, granted for 90 days, can be obtained by a foreign national by submitting their work permit to the Immigration Office together with relevant supporting documents. This must be done within 60 days of obtaining the work permit. Extension is possible for the entire duration of the employment contract plus a period of up to two years (depending on the circumstances).

Work Permit validity

One year

Required Documents

Meet all of the legal provisions and employer’s requirements for the position

Possess no criminal record that would prevent the individual from working in Romania

Provide a medical certificate that states the individual’s capability to carry out the tasks required for the job

Fall within the yearly quota for foreign citizens who may be granted a work permit.

The employee will also need to apply for a long-term visa and provide the following supporting documents:

  • The work permit obtained by the employer
  • Proof of accommodation in Romania
  • A valid passport
  • Two recent identifying photos
  • Proof of medical insurance for the duration of the visit
  • Police clearance or a background check from the employee’s country of residence
  • Evidence of sufficient financial means to support the visit
  • A flight ticket or proof of other accommodations for travel.
Compliant, reliable, error-free and touchless payroll in Romania

Build the best team and hire top talent compliantly in Romania. Get in touch with Romania payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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