Taxes in Romania

Employer Contributions in Romania

Work insurance contribution

Employers in Romania pay a 2.25% work insurance contribution based on the employee’s total taxable monthly income.

Employee Contributions in Romania

Social insurance

Employees in Romania must make mandatory contributions to the social security insurance monthly. The social security system finances old-age pension, sickness, and unemployment benefits. Employees contribute at a rate of 25% of their gross salary, including taxable benefits and allowances.

Health insurance

Employees in Romania make mandatory contributions to health insurance monthly. Employees contribute at a rate of 10% of their gross salary, including taxable benefits and allowances.

Income tax

Employees pay a 10% net income tax which is based on the gross salary minus pension, health, and personal deductions.

Employers must withhold each employee’s income tax contribution monthly and remit it to the tax authorities. Thus, employees don’t have to do any individual tax filing related to their salary income.

Benefits-in-kind taxation

Benefits in kind received as a result of employment are taxable income, except for a few minor exceptions, and are valued in principle at open-market values. A few exceptions include:

• Meal tickets: subject to income tax only, with the corresponding tax deducted from the net salary
• Gift tickets: granted for special occasions and non-taxable up to RON 300
• Private pension and private health insurance: tax-free up to EUR 400 per year; once above the limit, taxed as a salary benefit
• Vacation/tourism tickets: subject only to income tax if the cost is less than six minimum gross salaries; used for internal destinations/services
• Travel allowance: granted to employees and family members within the limit of a medium gross salary (RON 6,095), based on an expense report
• Cultural tickets: subject to income tax when up to RON 170 per month or RON 350 infrequently
• Mobility indemnity: RON 1,000 net non-taxable, for employees not carrying out their activities from a specific workplace (e.g., sales agents), with no additional travel allowance permitted

Teleworking allowance used to be a non-taxable benefit but will be starting from 2024. All amounts granted will be taxed with social contributions (public pension 25%, public health fund 10%) and income tax (10%).

The reimbursement of travel expenses in excess of fairly low statutory limits is also a taxable benefit for employees. Certain non-monetary educational and health benefits aren’t taxable under certain conditions.

Temporary accommodation provided by an employer as a non-monetary benefit is generally taxable with very few exceptions. A cash accommodation allowance is taxable.

On January 1, 2023, a new fiscal rule came into force, changing the benefit taxation. The limit for non-taxable benefits is 33% of the base salary. It means that if the total amount of monthly benefits received by the employee exceeds the 33% limit, the amount will be taxed as a salary benefit (pension, health, income tax).

The following benefits are exempt from the new regulation:

• meal tickets, holiday tickets, gift tickets, cultural tickets, daycare tickets
• burial assistance, serious and incurable disease assistance, medical devices, birth/adoption assistance, assistance granted for losses resulting from natural calamities
• employee’s transportation costs (to and from work)
• meal allowances if under the applicable regulations no food is permitted in the workspace
• delegation and detachment indemnities, indemnities received by mobile workers
• phone subscription costs
• employer-supported professional development expenses
• stock options plan benefits

As a general rule, all benefits are subject to the employer’s decision to grant them and should be detailed in the internal regulations.

Deductions

Romania doesn’t have a system of tax credits, but it does have a limited system of deductions for income tax calculations.

Employees with gross salaries under RON 3,600 benefit from a personal income tax deduction, depending on salary thresholds and the number of dependents.

Employees suffering from certain degrees of handicap (serious or pronounced) are exempt from paying income tax. They also benefit from three additional vacation days.

Private pension contributions

Employees making personal monthly contributions to a private pension fund are eligible for a corresponding income tax deduction of up to EUR 400 per year; however, they must provide their employers with proof of such contributions.

Employment expenses

Employees receive no deductions for expenditures incurred in connection with taxable income from employment. However, sums received by way of reimbursement for travel expenses, based on supporting documents and travel allowance, are exempt from tax as long as they don’t exceed statutory limits.

Employees working from home (teleworkers) are allowed to receive up to RON 400 per month tax-free to cover related utilities expenses, with no receipts or other supporting documents required.