What companies benefit the most from social security tax cut in Romania?

Companies that pay high and very high salaries to employees have benefited the most from the 5% reduction of the social security tax (CAS) in Romania, which became effective in October 2014. These companies are mainly active in the financial, IT and oil and gas extraction industries, according to an analysis made by outsourcing and advisory company Accace. On the other hand, in the case of small companies, the measure was canceled by the minimum salary increase. “For example, for an employee with a monthly gross wage of RON 3,000 (EUR 675), an employer saved RON 150 (some EUR 34) per month following the CAS reduction. The total cost for the company dropped from RON 3,834 (EUR 862) to RON 3,684 (EUR 828) per month. As a result, after six months, the employer reduced salary costs by RON 900 (EUR 202) per employee”, reads a statement of Accace. In the case of small companies, where most employees get the minimum wage, the situation is different. These companies felt the social security tax cut only between October and December 2014. Starting January this year, the minimum wage increase from RON 900 to RON 975 (EUR 219) canceled the effects of the CAS reduction. Compared to September 2014, when the total salary costs amounted to RON 1,150 (EUR 258) for a wage of RON 900, the employers registered an additional salary cost of RON 46 (more than EUR 10) per month starting January this year. Most of the companies who have saved some money due to the CAS reduction decided to use them for paying salaries and not for further investments. The Government plans to further reduce the social security tax. Irina Popescu, irina.popescu@romania-insider.com