Newsletter no. 1/2019

04/04/2019

EMERGENCY ORDINANCE NO. 114 OF 29.12.2018

1. Construction industry: higher minimum wage with simultaneous exemption from income tax and reduction of social security contributions

On the one hand, the ordinance sets a higher minimum wage for the construction industry. On the other hand, it provides for a full exemption from income tax and a proportional exemption from social security contributions for the construction sector. Thus, for the period 1 January 2019- 31 December 2019, a nationwide minimum basic wage of 3,000 lei per month has been set for the construction industry for a normal working time of 167.333 hours per month on average, i.e. 17.928 lei per hour.

  • This minimum wage applies only to employees who work for employers in the construction sector, as defined in CAEN 41.42.43 – Section F – Construction, or who carry out their activity in the manufacture of construction materials, as defined in CAEN codes 2312, 2331, 2332, 2361, 2362, 2363, 2364, 2369, 2370, 1623, 2512, 2511, 0811, 0812, 711. No distinction is made between those employed directly in construction and those employed in ancillary activities.
  • From 1 January 2019, companies will benefit from a number of tax or social security exemptions or reductions if they meet the following three conditions:
  1. they are engaged in construction or in the manufacture of construction materials (see CAEN codes above);
  2. they generate revenues from the activities referred to in subparagraph (a) of at least 80% of the total revenues, calculated from the beginning of the year, including the month from which the exemption applies;
  3. the gross and ancillary income earned by natural persons for whom the exemption applies is between 3,000 and 30,000 lei per month inclusive and paid on the basis of an individual employment contract.

 

If these conditions are met, the following exemptions shall apply:

  • Wage tax exemption (0% wage tax)
  • Exemption from pension insurance contribution (CASS), i.e. 0% CASS
  • Reduction of the health insurance contribution rate (CAS) by 3.7% to 21.25%.
  • Reduction of the contribution rate for employment insurance (CAM) from 2.25% to 0.375%.
  • Exemption from payment of the employer’s contribution for special working conditions

 

2. Option of transferring pension insurance contributions from private pensions to the statutory pension insurance scheme

  • Persons who have paid into a private pension fund may, after a period of 5 years, opt by means of an individual application to transfer these contributions to the statutory pension insurance. The balance at the time of the transfer remains in the participant’s personal account until the start of entitlement to a private pension.

3. Day-labourers only in 3 fields of activity

  • The areas in which day laborers can be employed according to Law 52/2011 regarding day laborers will be reduced. Day-labourers can only be employed in the following three areas of activity:
  1. a) Agriculture, hunting and related activities;
  2. b) Forestry other than deforestation;
  3. c) fishing and aquaculture.

 

4. New fee for banking institutions

  • Banks will be required to pay a new fee on financial assets if the average ROBOR interest rate in the quarter is higher than 2%. This percentage of 2% is a reference or threshold.

5. Gambling: Fee of 2% of the total participation fees collected.

  • From 1 January 2019, the organisers of games of chance, to which the provisions of the Emergency Ordinance 77/2009 concerning games of chance apply, will pay an annual fee of 2% of the total participation fees collected in the previous year as from 1 January 2019.

 


AMENDMENT OF THE TAX IMPLEMENTATION REGULATION 

Rules have been introduced on access by the central tax authority to information relating to the fight against money laundering:

Reporting companies that are under the legislation to prevent and combat money laundering and terrorist financing will, upon request, provide the Central Tax Authority with information and documents relating to the following within the statutory retention period:

(a) mechanisms and procedures by which precautionary measures are applied with regard to clients;

b) Identification of the client and the true beneficiary;

c) Evaluation of the purpose and desired nature of the business relationship;

d) monitoring the business relationship;

(e) recording of transactions.

  • The procedure for instalment payments to the tax office for overdue liabilities to the tax office is improved. In the approved period for the installment payments, it is now possible to apply for certain tax receivables (not valid for all) and approve them to be considered or offset as additional installment payments. A maximum of two applications can be submitted per calendar year.
  • The treatment of dividends distributed to natural persons by shareholder resolution before 01.01.2018 but actually paid after this date with regard to the obligation to pay health insurance contributions is now clarified. The ordinance stipulates that only dividends distributed and paid after 01.01.2018 are subject to the health insurance obligation and must be reported accordingly in the annual declaration.

 

 

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