Government imposes tax on employee bonuses higher than RON 150

Bonuses paid by employers in Romania to their employees for Christmas, Easter or International Women’s Day (March 8), which exceed 150 lei will be counted for the purposes of social security contributions, according to a draft Government Ordinance. Financial aid which will cover the cost of funerals, losses caused by natural disasters, birth, serious and incurable illnesses, transport to and from the workplace, treatment and rest services, as well as gifts to employees' minor children or to female employees, as provided by the collective labor contract, shall not be subject to taxation for the purpose of social security contributions. On the other hand, bonuses granted on various occasions, with a value exceeding RON150, will be taxed. The draft ordinance also says Romanians who gain income from freelance activities will pay, starting with 2011, social security contributions of at least 25.36 percent and up to 35 percent of their income, nearly double from the current level of contributions. Under current law, they pay social security contributions in the amount of 16.5 percent of their income. Furthermore, the pension insurance contribution is to increase to 24.43 percent from 10 percent, the health insurance contribution will increase to 8.35 percent from 5 percent, while the contribution to the unemployment aid fund will grow to 0.78 percent from 0.5 percent. Mediafax