Last updated: 22 February 2018
A new fiscal rule (Government Emergency Ordinance no. 3/2018) was approved by the Romanian authorities in order to maintain net salary incomes for certain categories of persons who were affected by the amendment of the Fiscal Code by the transfer of social security contributions from the employer to the employee.
In fact, OUG no. 3/2018, published in the Official Journal no. 125 as of 8 February 2018, attempts to correct the effects of Government Emergency Ordinance no. 79/2017 as regards software developers and persons who have benefited from tax exemptions, as well as people working based on a part-time employment contract.
Categories Concerned
OUG no. 3/2018 establishes a new and reduced CASS scheme for individuals exempted from income tax before 2018 (i.e. software developers, employees working in research and development, seasonal employees, people with serious or severe disabilities).
Nevertheless, please note that the CASS decrease is a temporary measure, applicable only in 2018.
In order to benefit from the diminished CASS, the abovementioned categories of people are required to cumulatively meet the following conditions:
1. The salary income must have been obtained under an employment contract in force on 31.12.2017.
Note: If the employee changes his/her employer, these provisions no longer apply.
2. The employee benefits from an increase in the monthly gross salary of at least 20% compared to the gross salary for December 2017.
It should be noted that the gross salary for December 2017 includes the gross basic salary and other salary elements paid each month under the individual employment contract valid in December 2017.
Pay attention! In the calculation of the reference gross salary for December 2017, any bonuses that could have been paid to the employee at the end of the year should not be taken into account.
Reduced CASS: Calculation Formula
The calculation formula used in determining the reduced CASS is the following:
CASS withheld = gross income 2018 - CAS 2018 (retirement contribution due in 2018) – net salary December 2017
Where:
• CASS withheld = CASS withheld by the employer, which cannot exceed the CASS calculated based on the Fiscal Code
• Gross income 2018 = income based on which CASS is calculated, obtained in 2018;
• CAS 2018 = contribution to the retirement fund, calculated and withheld in accordance with the Fiscal Code
• Net salary December 2017 = the net salary remaining after deduction of the compulsory social security contributions for December 2017, in accordance with the Fiscal Code, corresponding to the gross salary set forth in the individual employment contract in force on 31.12.2017.
The regulations for the implementation of these provisions must be published by the National Tax Authority within 15 calendar days from publication of the Ordinance in the Official Journal, namely no later than 23 February 2018.
Part-time Employment Contract
Article II point 4 of OUG no. 3/2018 amends article 146 of the Fiscal Code regarding the compulsory social security contributions due by the employees under a part-time employment contract and whose salary income is inferior to the minimum gross salary at the national level (1.900 Lei, approximately 415 €).
Thus, if the retirement contribution (CAS) calculated on the basis of the income earned by the employee working under a part-time employment contract is inferior to the CAS calculated for the basic gross salary at the national level, the difference will be paid by the employer on behalf of the employee.