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What benefits did employers prefer to offer on Christmas in Romania | Press Release

23 Dec 2014

„It’s obvious that in-kind benefits is the option most chosen by companies, because on Christmas they have the possibility to offer a type of benefit that is not subject to income tax and social contributions. We are referring to the gifts that employers offer in cash and in kind, for minor children of employees, up to a maximum of 150 RON”, said Maria Cojocariu, Payroll Manager Accace in Romania.

Interested in more details about Labour Law and Employment in Romania? Read also our recent eBook about local working conditions and taxes!

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Taxes for Christmas bonuses

  • CASH AND IN-KIND GIFTS FOR CHILDREN OF EMPLOYEE, LIMITED TO RON 150
  • GIFTS VOUCHERS FOR EMPLOYEES
  • CASH BENEFITS FOR EMPLOYEE

NOT subject of income tax and social contribution

Subject to 16% income taxe

Subject to 16% income tax, as well as social contribution

In addition, there is a minimally taxable option, in the form of gift vouchers, which are subject only to income tax. The majority of other in-kind benefits are subject to all social contributions and income taxes, so they are not an attractive option for either party – employee or employer.

When it comes to cash benefits, they translate into bonuses and are subject to income tax and mandatory social contributions, for both the employer and the employee, thus generating the highest cost of the two categories.

“Another important aspect is the identification of the satisfaction level brought by each of the two categories of benefits among employees. More and more often we see organizations that are paying attention to the satisfaction brought by these benefits, rather than addressing the principle of offering a single benefit to all employees”, Maria Cojocariu added.

According to her, a specialist in the area of compensations and benefits should cover this topic from two points of view, both of the organization it represents (the cost-effective perspective) and of an employee within that organization (the Christmas bonus perspective).

Thus, highly technologies companies, where HR systems allow it, organize campaigns in which employees can choose a benefit from a list provided by the company. Based on the results, the company makes a decision, considering the most voted benefit.

In an ideal situation, in-kind benefits would be nominal, depending on the results of the questionnaires used in the process described above, taking into account the expectations and preferences of each employee, while respecting the budget that the organization provided for this activity. This practice would ensure a 100% satisfaction level among employees and a similarly high engagement level.

“However, in reality, identifying the needs of employees at such a detailed level is very difficult to achieve and requires a lot of time and energy from everyone. The logistical difficulty, along with the high cost generated by such an assessment, doesn’t make this proposal an effective solution or one that is preferred by employees, which is why companies prefer to stick to the traditional models of benefits”, the Accace representative concluded.

Contact our Payroll and HR specialists from Romania!

CONTACT

Maria Cojocariu
Payroll Manager | Accace Romania
E-mail: Maria.Cojocariu@accace.com

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Originally established in Central and Eastern Europe in 2006, Accace ranks among the leading outsourcing and consultancy providers in the region. Engaging over 600 experts, we have vast experience with handling small to large scale, multi-country outsourcing projects and providing a comprehensive range of our services to over 2,000 customers.

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Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience. Covering almost 40 jurisdictions with over 2,000 professionals, we support more than 10,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 170,000 pay slips globally.

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