Planned social security tax cut to place Romania second in the region for lowest social security costs

The planned social security tax (CAS) reduction by 5 percentage points, from the current 20.8 percent to 15.8 percent, would place Romania second in the region in terms of the lowest social security costs, after Slovakia, where employers' contributions for the pension currently stands at 14 percent, according to a study conducted by Accace. Poland ranks third in the top with a contribution of 16.26 percent, followed by the Czech Republic with 21.5 percent, and Hungary with 27 percent. “The CAS reduction by 5 percentage points, to be applied from October 1, is particularly encouraging as it will not trigger an increase in other taxes or a change in the maximum ceiling, according to officials’ statements. Thus, employers will see the change as a real step towards balancing the social contribution in Romania to that of other countries in the region,” said Maria Cojocariu, Payroll Manager Accace in Romania. For example, for an employee with a gross salary of RON 1,000, the employers now pay a CAS of RON 208. After the cut planned by the Romanian Government, they would pay RON 158. In terms of total contributions paid by employers, the CAS cut would also place Romania second in the region, with a rate between 22.75 percent and 23.45 percent. However, despite the CAS drop for employers, Romania would still record one of the highest pension contributions paid by employees in the region, of 10.5 percent, compared to the Slovaks and the Czechs who have a rate of just 4 percent and 6.5 percent respectively, according to Accace. Romania’s budget stands to lose EUR 5 billion until 2018 from social security tax cut. Irina Popescu, irina.popescu@romania-insider.com