Companies in Romania below EUR 1 mln to pay 1% tax on turnover

Over 450,000 firms with a turnover below EUR 1 million will pay a 1% tax on their turnover instead of the 16% profit tax paid today, finance minister Ionut Misa announced yesterday. The threshold for microenterprises will thus be doubled from the current level of EUR 500,000, which entered into force on February 1, this year. Before that date, only companies with turnovers under EUR 100,000 were considered microenterprises and paid a tax on revenues instead of profits. Employers will pay a 2.25% "insurance contribution for work", which will cover the risks of unemployment, accidents, sick leave, salary claims, the minister added. The total social contributions, which are currently paid both by employees and employers, will drop from 39.25% to 37.25%. The social contributions paid by employees will reach 35% of the gross salary, up from 16.5% now. Employers will be left with a 2.25% social contribution, down from 22.75%, Misa explained. The tax on individual income will decrease from 16% to 10%, according to the Government. This will apply not only to wages, but also to pensions over RON 2,000, and revenues from interest rates or agricultural activities. Freelancers will not pay social contributions based on their actual income anymore, but these contributions will be calculated at the level of the gross minimum wage. editor@romania-insider.com