In Romania, the most significant change approved by the Romanian Government was the social contributions transfer from companies to employees. Following these changes, Romania became the EU’s only member state to shift all social security taxes to employees. More, the minimum wage increased and the personal income tax (PIT) has decreased.
Check the employment taxation changes for other CEE 4 countries (Czech Republic, Hungary, Poland and Slovakia) from our latest eBook: “Summary of the most significant changes affecting employment taxation in 5 CEE countries, 2018” .
Social contributions transfer
From the beginning of the year:
- Social contributions owed by the Employee: 35% (as compared with 16.5%, in 2017) – the part of the social charges paid until 2018 by employers became the liability of employees, leaving them with the full burden of social charges (pension and health contributions) on salary income.
- Social contributions owed by Companies in Romania: 2.25 (as compared with 23.45%, in 2017) – currently the employers pay the contribution for work insurance of 2.25% on the remuneration paid to their employees.
Not surprisingly, this measurement had a heavy impact on net pay for employees. To ensure employer-employee dialogue facilitating the transfer of contributions and addressing any net earning concerns, the government mandated all employers — regardless of size — to conclude collective agreements with their employees.
Increase of the minimum wage
The minimum wage increased from RON 1,450 to RON 1,900 gross, representing RON 11.40/hour.
To understand better these changes and for simulation purposes, you can check the 2018 salary calculator for Romania.
Personal income tax
Starting with January 1st, the income tax rate applied on salary income has decreased at 10% as compared to 16% in year 2017.