Bucharest, June 18, 2014 – The planned social security tax (CAS) reduction by 5 percentage points for the employers, from the current 20.8 percent to 15.8 percent, would place Romania second in the region in terms of the lowest social security costs, after Slovakia, where employers’ contributions for the pension currently stands at 14 percent, according to a study conducted by Accace, one of the leading outsourcing and business advisory companies in Central and Eastern Europe.
Poland ranks next in the top social security costs in the region, with a contribution of 16.26%, followed by the Czech Republic with 21.5%, while Hungary withhelds a 27% quota from employers for pension payments.
„The CAS reduction by 5 percentage points, to be applied from October 1, is particularly encouraging as it will not trigger an increase in other taxes or a change in the maximum ceiling, according to officials’ statements. Thus, employers will see the change as a real step towards balancing the social contribution in Romania to that of other countries in the region”, said Maria Cojocariu, Payroll Manager Accace in Romania.
For an employee with a gross salary of RON 1,000 his employer currently pays a CAS of RON 208, that value being set to drop to RON 158 after the cut is introduced. „Thus we have a RON 50 decrease in costs per employee, and if we think bigger, we can conclude that the decrease of CAS to 15.8% will bring significant savings to employers”, Maria Cojocariu added.
In terms of total contributions paid by employers, the CAS cut would also place Romania second in the region, with a rate between 22.75 percent and 23.45 percent, compared to Poland, which ranks first, having contributions of 19.48% – 22.67%, depending on the contribution to the disability fund.
Pension contributions paid by Romanian employees, among the highest in the region
However, despite the CAS drop for employers, Romania would still have one of the highest pension contributions paid by employees in the region, of 10.5 percent, compared to the Slovaks and the Czechs who have a rate of just 4 percent and 6.5 percent respectively. Poland has the highest costs when it comes to the payment of pensions, each employee contributing 11.26 percent of its gross salary to the social insurance fund.
„Trade unions have unsuccessfully called for dividing the 5% equally between employee and employer, therefore the 10.5% contribution currently withheld from Romanian employees maintains Romania among the countries with the biggest deductions for employees for the payment of pensions”, Maria Cojocariu concluded.|Contact Maria Cojocariu Payroll Manager Maria.Cojocariu@accace.com