Romania: Recent Amendments To The Romanian Fiscal Code And Their Impact On Employment Relationships

Last Updated: 27 November 2017
Article by Tiberiu Csaki, Anda Todor and Anamaria Corbescu

The main amendments brought by Government Emergency Ordinance no. 79/2017 to the Romanian Fiscal Code impacting employment relationships as of 1 January 2018 are the following:

  • The categories of mandatory social contributions set by the Romanian Fiscal Code payable by employers and by employees in different proportions are reduced from six (to date) to three, payable as follows:

    • Contribution for Social Insurance (CAS), payable by the employee (in the amount of 25%), and also by the employer, in case of special working conditions (in the amount of 4%) and in case of particular working conditions (in the amount of 8%);
    • Social Health Insurance Contribution (CASS), payable by the employee (in the amount of 10%);
    • Labor Insurance Contribution, payable by the employer (in the amount of 2.25 %).
  • Income tax is reduced from 16% to 10%.
  • The Government has also approved an increase of the amounts for personal deductions:

    • From RON 1,500 (to date) to RON 1,950 - threshold up to which the personal deductions are granted in fixed amounts (subject to the number of persons depending financially from the taxpayer);
    • From RON 3,000 (to date) to RON 3,600 - maximum threshold up to which the deductions are digressive.For income exceeding RON 3,600 per month, no personal deduction is granted.

For income exceeding RON 3,600 per month, no personal deduction is granted.

Government Emergency Ordinance no. 82/2017 imposes stifling deadline for employers to initiate collective negotiations for the implementation of the shift of social contributions provided by Government Emergency Ordinance no. 79/2017

  • Further to the above changes regarding the transfer of social security contributions, Government Emergency Ordinance 82/2017 was published, stipulating that between 20 November 2017 and 20 December 2017, the employers that do not have collective labor agreements in place at the company level must initiate collective negotiations for the implementation of the transfer of social contributions provided by the Government Emergency Ordinance 79/2017, and those who have such contracts must negotiate additional acts to contracts for the same purpose.
  • The obligation to initiate or carry out collective bargaining applies to all employers, regardless of the number of employees.
  • Although the Government Emergency Ordinance 82/2017 does not stipulate any sanctions, under the Romanian Social Dialogue Law 62/2011, the employer's refusal to initiate the collective bargaining is sanctioned with fines amounting from RON 5,000 (approx. €1,100) to RON 10,000 (approx. €2,200).
  • For the mentioned period of time (20 November – 20 December 2017) Government Emergency Ordinance 82/2017 sets derogations from the rules related to participation of union federations and confederations to collective negotiations, as follows:

    • For companies where there is no representative trade union affiliated to a union federation representative for the relevant activity sector, the collective negotiations may be conducted with the employees' representatives, along with representatives of a union federation (representative for the relevant activity sector), based on the mandate granted by the existing trade union at company level;
    • For companies where there is no trade union organized at company level, the collective negotiations may be conducted with the employees' representatives, along with a representative of a union federation representative for the relevant activity sector, or of a union confederation representative at national level, based on the invitation of the employees' representatives.

To navigate these tricky legislative waters, we recommend asking for professional advice.

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