Payroll in Romania

Mercans is the premier choice for top-quality payroll outsourcing services in Romania, and of course, Payroll SaaS. Our dedication to delivering exceptional payroll solutions in Romania is steadfast. With extensive experience in the payroll sector, Mercans guarantees precise and compliant payroll services in Romania, establishing us as the preferred partner for businesses of all scales. Rely on Mercans for punctual and precise payroll transactions, coupled with the convenience of multi-currency payments in the Romanian market. As your trusted local payroll provider in Romania, we feature a team of in-country payroll specialists well-versed in local regulations, offering comprehensive assistance for a seamless payroll experience tailored to your specific business requirements.

Everything you need to know before running payroll in Romania

Working Hours and Overtime

The typical workweek consists of five days, with eight hours per day. Employees cannot work more than 48 hours per week, including overtime. Overtime can be compensated with either additional time off or extra pay, equivalent to 75% of the gross salary.

In Romania, the standard workweek runs from Monday to Friday, spanning from 9 am to 6 pm. If employees work more than six hours in a day, they are entitled to meal breaks and other intervals, which are not counted as regular working hours.

Minimum Wages

The minimum wage in Romania, set by the government, is the lowest monthly or hourly pay employers can legally offer their employees in the country. As of October 1st, 2023, the current minimum wage stands at 3,300 RON, equivalent to 665 € gross for general workers. For construction workers, the minimum wage is 4,582 RON, translating to 924 €.

13th Month Salary

While Romania doesn’t mandate the payment of a 13th or 14th month salary, numerous companies implement a 13th month scheme. This initiative entails rewarding employees with an additional month’s salary as a year-end bonus. Bonuses are prevalent in Romania, often being discretionary and tied to performance.

Payroll Cycle

In Romania, payroll is commonly issued on a monthly basis, with employees typically receiving their payment on the final working day of each month.

Company Formation in Romania

Establishing a company in Romania follows a three-step procedure:

Step 1: Acquiring the License

During this phase, you’ll finalize the paperwork to establish a legal entity. Once the following criteria are fulfilled, you can secure an official license:

  • Conceptualization of the company
  • Submission of a project proposal
  • Development of a business plan
  • Availability of operational capital
  • Formation of a competent management team
  • Acquisition of suitable office space

Step 2: Completing the Registration

After obtaining the license, the subsequent step involves registering the company with either a notary or the Romanian register. This entails completing the following tasks:

  • Submission of business particulars
  • Specification of company type (e.g., limited liability or private)
  • Declaration of company activities
  • Selection of company name and address
  • Submission of management team details
  • Listing of company partners

Step 3: Maintaining Company Records

In the final phase, you’ll conduct requisite company operations, including establishing the management structure, appointing key personnel, opening a company bank account, and organizing an annual general meeting.

Requirements and Procedures for Company Registration in Romania

To register a company in Romania, you must fulfill the following criteria:

  • Conceptualization of the company
  • Submission of a project proposal
  • Development of a business plan
  • Minimum operational capital of 200 Ron
  • Formation of a competent management team
  • Availability of suitable office space (two business centers have been operational since 2009)

To register a company, you’ll need to provide specific documentation to either the notary or registrar, whose contact details can be found on their respective websites. Company registration in Romania can be carried out via the following methods:

  • Traditional paper filing
  • Utilization of a computer program for registration

Payroll Compliance in Romania

Registration Requirements

In Romania, employers must fulfill specific registration requirements to ensure compliance with payroll regulations. This includes registering with the appropriate Tax Office and submitting necessary documentation, such as a tax registration declaration and copies of employment agreements, within 30 days of hiring the first employee. Failure to meet these obligations can result in fines.

Ongoing Compliance Requirements

Employment Income:

  • Income Tax: Employers are responsible for computing, withholding, declaring, and paying income tax and social security charges for employees on the local payroll. These obligations must be met by the 25th of the following month.
  • Social Security and Healthcare Charges: Both employers and employees contribute to the social security system. Employers must pay work insurance and disabled people’s funds.

Corporate Statutory Monthly Payroll Statement

  • Employers prepare monthly payroll statements, although these are not filed with authorities but must be kept for 50 years.

Monthly Payroll Related Tax Return

  • Employers must file monthly tax returns regarding social contributions, income tax, and insured individuals’ records.

Employees’ Annual Fiscal Records

  • Employers must provide annual salary certificates upon request, detailing salary incomes and contribution history.

Electronic General Registry of Employees

  • Employers must file employee information according to labor legislation.

Governing Laws

  • Compliance with payroll regulations in Romania is governed by various laws, including the Romanian Labor Code, Fiscal Code, and General Data Protection Regulation (GDPR).

In summary, ensuring payroll compliance in Romania requires diligent adherence to registration and ongoing requirements outlined by relevant legislation, with specific attention to income tax, social security, and healthcare contributions.

Pension Requirements in Romania

In Romania, pension requirements are governed by Law 204/2006, which regulates the optional pension scheme (Pillar III). This scheme allows individuals to make voluntary contributions to authorized pension funds, with employers also able to contribute, providing a benefit to their employees. Contributions to the voluntary occupational pension scheme are deductible for salary income tax purposes, subject to certain limits.

Payroll Requirements in Romania

Romania mandates monthly payroll payments, typically made by the end of the month or at the beginning of the following month. While there is no legal obligation to provide payslips, it is common practice to do so. Employers must maintain evidence of hours worked and leave taken, but there are no specific guidelines on the format of timesheets. Additionally, documents and data related to payroll, such as the General Registry of Employees, must be stored for 50 years to ensure compliance with legal provisions.

Banking Requirements in Romania

Regarding banking requirements for payroll in Romania, there are no legal restrictions on salary transfers, which can be made from both Romanian and foreign bank accounts. However, it is recommended to use a Romanian bank account for payments to authorities, as some foreign banks may not directly transfer amounts in Romanian leu to the Romanian public treasury. Payments for salary income tax and social charges should be made in Romanian leu using the bank details listed on the Ministry of Finance’s official website, in accordance with Romanian Fiscal Code regulations.

Payroll Taxes in Romania

Social Security in Romania

Social security in Romania encompasses both employers’ and employees’ contributions to the social security system. Employees are required to contribute a portion of their monthly gross salary earnings to the system. This includes a 25% contribution for pensions (social security) and a 10% contribution for the health fund.

Employers are also obligated to contribute to the social security system, with monthly charges including a 2.25% work insurance contribution. Additionally, companies with at least 50 employees must hire disabled individuals, or alternatively, pay a predetermined amount to the state budget.

It’s noteworthy that certain individuals, such as citizens of European Union countries and Switzerland working in Romania, may be exempt from social security charges if they obtain relevant European certificates. However, those not exempted are subject to Romanian social security regulations.

Overall, compliance with social security regulations in Romania is essential for both employers and employees to ensure they meet their obligations and benefit from the social security system’s protections.

Personal Income Taxes

Tax Residence StatusRomanian citizens residing in Romania are considered tax residents and are taxed on their global income. Foreign individuals and non-resident Romanian citizens are taxed only on income derived from Romanian sources until they become tax residents.
ExemptionsSalary income earned abroad for work performed abroad is exempt from taxation for Romanian tax residents, unless they can provide tax residency certificates from a country with which Romania has a double tax treaty.
Transitional Tax ResidencyRomanian citizens proving tax residency in a country without a double tax treaty with Romania are subject to Romanian taxation on worldwide income for the year of residency change and the following three calendar years.
Tax RatesGenerally, a flat Personal Income Tax (PIT) rate of 10% applies. However, various exceptions exist, including different tax rates for dividends, capital gains, income from property transfers, and gambling activities.
Special ConsiderationsTax rates for certain types of income may vary based on specific circumstances. For example, dividends, capital gains, and income from gambling activities may be subject to different tax rates depending on income levels.

Employee Benefits in Romania

In Romania, employee benefits play a crucial role in attracting and retaining talent while shaping an employer’s brand. These benefits vary widely based on industry type, salary levels, and location.

1.1 Mandatory Employee Benefits:

  • Workers’ Compensation: Managed by the government, it provides compensation for work accidents and professional diseases. There are no facultative insurance products due to legislative gaps.
  • Pensions (Pillars I and II):
    • Pillar 1: Mandatory contributions to the public pension system, with contributions deducted from salaries.
    • Pillar 2: Mandatory contribution to private pension funds, with participation compulsory for certain age groups.
    • Pillar 3: Voluntary private pension funds.
  • Public System Healthcare: All residents contribute to the public health system, with exceptions for specific groups. Insured individuals have rights to various medical services, with contributions set at 10% of gross salary for employees.

Overall, health insurance remains the most valued benefit in Romania, followed by life insurance solutions. While the public medical system is underfunded, private medical care is increasingly sought after by the population. Additionally, voluntary pension schemes are gaining popularity among older employees, reflecting evolving preferences in the benefits landscape.

1.2 Supplementary Benefits

Supplementary benefits in Romania complement mandatory employee benefits and are often tailored to meet specific employee needs or enhance overall compensation packages. These benefits go beyond the basic offerings mandated by law and play a crucial role in attracting and retaining top talent. Here’s an overview based on the information provided:

  • Private Health Insurance:
    • Many employers offer private health insurance to supplement the deficiencies of the public healthcare system.
    • Private health insurance provides access to premium medical services, shorter waiting times for treatments, and access to specialized healthcare facilities.
  • Additional Pension Contributions:
    • While Pillars I and II cover mandatory pension contributions, some employers offer additional contributions to employees’ private pension funds (Pillar 3).
    • These voluntary contributions help employees build a more substantial retirement fund and provide greater financial security in the long term.
  • Life Insurance:
    • In addition to mandatory social security contributions, employers may offer life insurance coverage to employees.
    • Life insurance provides financial protection to employees’ families in the event of their death, offering peace of mind and security.
  • Disability Insurance:
    • Supplementary disability insurance policies provide income protection in the event of temporary or permanent disability.
    • These policies offer financial support to employees who are unable to work due to injury or illness, ensuring they maintain their standard of living.
  • Flexible Spending Accounts (FSAs):
    • FSAs allow employees to set aside a portion of their salary on a pre-tax basis to cover eligible healthcare expenses not covered by insurance.
    • Employees can use funds from their FSA to pay for medical expenses such as deductibles, copayments, and certain over-the-counter medications.
  • Wellness Programs:
    • Employers may offer wellness programs aimed at promoting employee health and well-being.
    • These programs may include gym memberships, fitness classes, nutritional counseling, stress management workshops, and employee assistance programs.
  • Transportation Benefits:
    • Some employers provide transportation benefits such as subsidized public transportation passes or reimbursement for commuting expenses.
    • These benefits help employees offset the cost of transportation to and from work, improving their overall financial wellness.
  • Education Assistance:
    • Educational assistance programs may include tuition reimbursement, scholarships, or subsidies for job-related training and professional development.
    • These benefits support employees’ career advancement goals and contribute to their personal and professional growth.

Benefits of Payroll Outsourcing in Romania

  • Compliance with Complex Regulations: Entrusting payroll services in Romania to external experts guarantees meticulous adherence to intricate labor laws and regulations. These seasoned professionals navigate complexities adeptly, minimizing the risk of errors or penalties due to non-compliance, providing businesses with peace of mind.
  • Scalability and Flexibility: Payroll outsourcing offers unparalleled scalability and flexibility to accommodate the evolving needs of businesses. Whether expanding their workforce or adjusting to changes in employment regulations, outsourcing providers seamlessly adapt their services to meet these demands.
  • Access to Advanced Technologies and Expertise: By leveraging cutting-edge software solutions, outsourcing providers streamline processes, enhance data security, and improve efficiency in payroll management. Moreover, professionals possess extensive knowledge of tax regulations, deductions, and reporting requirements, ensuring accurate and timely processing.
  • Cost Savings and Competitive Pricing: Outsourcing payroll leads to significant cost savings by eliminating the need to hire and train in-house staff. Additionally, providers often offer competitive pricing models tailored to the specific needs of businesses, optimizing cost-effectiveness while maintaining quality service.
  • Supporting Business Growth: Overall, outsourcing payroll services in Romania enables businesses to concentrate on core objectives while benefiting from accurate, compliant, and cost-effective management. With specialized expertise, advanced technologies, and scalability, providers play a crucial role in supporting the growth and success of businesses.
  • High Safety Standards: Incorporating industry-leading security measures to safeguard sensitive data, along with ISO 27001 and ISAE3402 certifications, ensures stringent adherence to information security protocols.
  • Adequate and Sustainable Performance: Ensuring consistent and sustainable performance that meets the dynamic demands of payroll services.
  • Flexibility and Scalability: Offering flexibility and scalability to accommodate evolving client needs and adapt to changing business environments.
  • Collaborative Cloud Tool: Utilizing a Cloud-based platform that facilitates collaborative work, promoting efficiency and accessibility across teams. These certifications signify a commitment to the highest standards of information security and operational integrity.

Payroll Solutions in Romania

Maximize the efficiency of payroll processing in Romania with Mercans’ Global Payroll Solutions. Our adaptable models guarantee local compliance, facilitate multi-currency transactions, and seamlessly integrate with global Human Capital Management (HCM) and Enterprise Resource Planning (ERP) systems, making accurate payments easier than ever before.

Explore Our Flexible Models:

  • SaaS (Software as a Service): Customized for enterprise businesses managing payroll across multiple countries with diverse data points, locations, currencies, and languages. Our SaaS model optimizes operations for maximum efficiency.
  • Managed Services: Tailored for mid-sized and large enterprise businesses handling multi-country payroll, our Managed Services model provides on-demand HR expertise, ensuring security, reliability, and compliance at every step.
  • HRMS (Human Resource Management System): Ideal for mid to large businesses in expansion mode, our HRMS model offers a comprehensive suite of functionalities, including payroll and benefits. Companies can select the features they need, ensuring a personalized and efficient solution.

Streamline Payroll with Mercans’ Technology and Integrations

  • Technology: Explore the forefront of innovation with Mercans’ cutting-edge technology that powers our global payroll solutions. Learn more about our technological prowess here
  • Integrations: Seamlessly integrate your Human Capital Management (HCM) systems with Mercans’ solutions, enhancing efficiency and connectivity. Discover the power of integration here.
  • Recognitions: Join a partner recognized for excellence. Mercans has earned accolades for its commitment to delivering exceptional payroll services. Explore our awards and recognitionshere.

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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.