Romania – Changes in social security & tax effective Jan 2024

The fiscal code has been amended through several normative acts. Effective 1^st January 2024, the changes below, are applicable for health insurance as per GEO 115/2023 & 296/2023.

Changes in earnings subject to health insurance (CASS)

• Sick leave/medical allowances are included in health contribution calculation base with the exception for indemnities related to temporary incapacity to work granted because of accidents at work or occupational diseases based on law no. 346/2002.
• Holiday vouchers and meal vouchers will also subject to the 10% health contribution. Cultural, nursery and social vouchers granted based on legislation will keep the same fiscal treatment as now, i.e., they will only be included in the income tax base.

Changes in non-taxable earnings

Regarding the non-taxable salary income within the monthly limit of maximum 33% of the basic salary, amendments are provided:

• Telecommuting allowance exemption up to Lei 400 is eliminated. It is fully taxable now.
• The value of sports subscriptions is reduced from EUR 400 to EUR 100 per year. The limit is also applied for the deduction for subscriptions borne by employees.
• The favourable difference between the negotiated preferential interest and the market interest, for loans and deposits which was fully non-taxable, is now included in this list of benefits exempted up to 33% of basic salary.
• The amounts borne by the employer for the early education of the employees’ children, within the limit of 1,500 lei/month for each child is included in the list of benefits exempted up to 33% of basic salary.

The provisions on the calculation base for the social charges are also amended to exclude from the calculation base, these benefits described above.

Clarification on ceiling for non-taxable daily allowance

Daily allowance (delegation allowance, posting allowance, including the allowance specific to transnational posting, additional benefits received by mobile workers) is exempt within the limit of 2.5 times the legal level established by government decision, for the staff of public authorities and institutions, within the limit of 3 base salaries corresponding to the main workplace.

The ceiling related to the value of 3 base salaries corresponding to the job occupied is calculated as “[(3 times base salary/working days) * allowance days]”.

Changes for IT, construction, agriculture, and food industry sectors’ salaries

Exemptions for IT, construction, agriculture, and food industry activities have been eliminated or reduced.

• Employees with income from software creation will pay tax on salary income which exceeds Lei 10,000 per month. For the exempted income, they are exempted from paying the contribution to Pillar II for pensions. Employees may express/ waive the full contribution option by submitting a written request to the employer. It will apply from following month of application.
• The employees earning salaries for a fraction of month at one or more employers consecutively in same month, each employer calculates monthly Lei 10,000 exemption for the corresponding period.
• Employees in the construction, agriculture and food industry sectors will pay the health contribution (CASS).
• Employers in the construction, agriculture and food industry sectors will become again (as in the past) payers of the social security contribution, for activity carried out under special or other working conditions.

The facilities specific to all these industries are valid until 31^st December 2028. The exemption applies at the place where the basic function is located.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change

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Romania – Changes in Social security & tax effective Jan 2024

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