Romanian Government’s recent tax measures generate extra costs for employers

The increase in the gross minimum wage, as well as the transfer of social contributions from employers to employees, will generate additional costs for employers. The overall cost will go up by RON 120 (EUR 26) per month for each employee paid the minimum wage, once these changes come into force, according to PwC Romania. Expanding the 1% turnover tax instead to companies with turnovers between EUR 500,000 and EUR 1 million will mostly affect companies with low profitability and those that record losses, PwC specialists say. Companies with profit margins lower than 6.25% will need to pay a higher tax than they do today. The 1% turnover tax will apply to all companies with a turnover below EUR 1 million starting January 1, 2018. This tax currently applies only to companies with turnovers under EUR 500,000. About 80% of the companies registered in Romania have a turnover below EUR 1 million, PwC Partner Mihaela Mitroi said. The bill, which brings significant changes to the current Fiscal Code, also provides that employees will need to fully cover their social contributions. However, it doesn’t stipulate the compulsory nature of wage increases to keep the current level of net salaries. Gross minimum wage to increase to EUR 413 in Romania Companies in Romania below EUR 1 mln to pay 1% tax on turnover editor@romania-insider.com