Employers in Romania pay a 2.25% work insurance contribution based on the employee’s total taxable monthly income.
Employees in Romania must make mandatory contributions to the social security insurance monthly. The social security system finances old-age pension, sickness, and unemployment benefits. Employees contribute at a rate of 25% of their gross salary, including taxable benefits and allowances.
Employees in Romania make mandatory contributions to health insurance monthly. Employees contribute at a rate of 10% of their gross salary, including taxable benefits and allowances.
Employees pay a 10% net income tax which is based on the gross salary minus pension, health, and personal deductions.
Employers must withhold each employee’s income tax contribution monthly and remit it to the tax authorities. Thus, employees don’t have to do any individual tax filing related to their salary income.
Benefits in kind received as a result of employment are taxable income, except for a few minor exceptions, and are valued in principle at open-market values. A few exceptions include:
The reimbursement of travel expenses in excess of fairly low statutory limits is also a taxable benefit for employees. Certain non-monetary educational and health benefits aren’t taxable under certain conditions.
Temporary accommodation provided by an employer as a non-monetary benefit is generally taxable with very few exceptions. A cash accommodation allowance is taxable.
On January 1, 2023, a new fiscal rule came into force, changing the benefit taxation. The limit for non-taxable benefits is 33% of the base salary. It means that if the total amount of monthly benefits received by the employee exceeds the 33% limit, the amount will be taxed as a salary benefit (pension, health, income tax).
The following benefits are exempt from the new regulation:
As a general rule, all benefits are subject to the employer’s decision to grant them and should be detailed in the internal regulations.
Romania doesn’t have a system of tax credits, but it does have a limited system of deductions for income tax calculations.
Employees with gross salaries under RON 3,600 benefit from a personal income tax deduction, depending on salary thresholds and the number of dependents.
Employees suffering from certain degrees of handicap (serious or pronounced) are exempt from paying income tax. They also benefit from three additional vacation days.
Employees making personal monthly contributions to a private pension fund are eligible for a corresponding income tax deduction of up to EUR 400 per year; however, they must provide their employers with proof of such contributions.
Employees receive no deductions for expenditures incurred in connection with taxable income from employment. However, sums received by way of reimbursement for travel expenses, based on supporting documents and travel allowance, are exempt from tax as long as they don’t exceed statutory limits.
Employees working from home (teleworkers) are allowed to receive up to RON 400 per month tax-free to cover related utilities expenses, with no receipts or other supporting documents required.