Payroll in Romania: Your efficient overview for business compliance in 2025

The proper management of payroll in Romania is particularly important due to the country’s complex legal and tax framework, which demands constant attention and compliance with frequent updates to labour laws, tax regulations, and social security contributions. Many of these companies are subsidiaries of multinational corporations, which must align their payroll practices with Romanian legislation to avoid sanctions from local authorities.

Romanian authorities impose strict reporting obligations, such as the submission of monthly tax declarations (D112), making precise payroll calculations essential not only for avoiding penalties but also for maintaining a positive reputation.

Moreover, the strong emphasis on employee rights, including timely wage payments, fair overtime compensation, and compliance with collective labour agreements, highlights the critical role of payroll in supporting both legal and ethical business operations.

In this article, you will learn:

• The legal framework governing payroll in Romania, including key regulations and upcoming legislative changes.
• The components of payroll, such as salary structure, mandatory deductions, and contributions.
• The payroll process in Romania, including pay schedules, payslip requirements, and reporting obligations.
• The advantages of payroll outsourcing, how it ensures compliance, and tips for selecting the right provider.
• The challenges and compliance risks businesses face when handling payroll in Romania.
• Why a deep understanding of Romanian payroll is essential and how partnering with local experts can make a difference.

Payroll in Romania vs. the local business environment

The Romanian business environment has a significant impact on payroll practices due to its dynamic nature and specific challenges. The country’s steady economic growth has heightened the need for efficient payroll systems to manage expanding workforces.

Payroll structures must also account for Romania’s specific taxation system, which includes mandatory income tax and social security contributions, alongside frequent legislative updates that impact payroll processes. Companies must navigate changes to the minimum wage, allowances, and non-taxable benefits, adapting quickly to stay compliant.

Moreover, the progressive digitalization promoted by Romanian Authorities, through tools such as electronic register of employees and online payroll submission system, drives businesses to adopt technologies that streamline operations and ensure compliance with legal requirements.

Legal framework governing payroll in Romania

Payroll in Romania operates under a detailed legal framework designed to regulate both employment relations and fiscal taxation rules.

The primary regulations include the Labor Code (Law no. 53/2003), which serves as the foundation of employment law, addressing aspects such as wage obligations, overtime rules, and leave entitlements. Complementing this is the Fiscal Code (Law no. 227/2015), which governs salary income tax, social security contributions and health insurance payments.

Recent changes to the law regulating payroll in Romania reflect a continuous effort to improve compliance, adapt to economic conditions, and support the labour market. The gross minimum wage has been increased to support the inflation and economic environment, which involves adjustments in payroll calculations.

As of January 1, 2025, the guaranteed gross minimum wage was raised to RON 4.050 per month from RON 3.700. There have also been updates to the maximum values of meal vouchers, cultural vouchers, and childcare vouchers, which businesses must consider when managing.

Payroll components: Salary structure and deductions

Understanding the structure of payroll in Romania is essential for businesses to manage employee salaries effectively and remain compliant with local regulations.

Gross salary and components

In Romania, gross salary represents the total compensation agreed upon between the employer and the employee before the application of any taxes or contributions. The gross salary typically includes the base salary, which is the fixed monthly amount outlined in the employment contract, as well as bonuses, allowances, increments, incentive, other financial benefits.

Once the gross wage income is calculated, mandatory deductions and contributions are applied to determine the net salary of employee. These deductions include salary income tax and social contributions, which are calculated, withheld and paid by the employer to the Tax Authorities on behalf of the employee.

Mandatory deductions and contributions

The main mandatory deductions are:

These deductions and contributions are mandatory, and employers are responsible for calculating, withholding, submitting and paying them to the relevant authorities to ensure compliance with Romanian labour and tax laws.

Payroll process in Romania

Managing payroll in Romania requires respecting specific legal obligations, timelines and reporting requirements to ensure compliance.

Pay schedules and payment obligations

In Romania, salaries must be paid at least once per month, on the payment date stipulated in the individual employment contract, applicable collective labour agreement, or internal regulations.

Payslip requirements

The payslip is an informational document that provides to the employee a detailed breakdown of his salary. Employers determine the specific information included in the payslip, offering transparency about salary components, taxes withheld, and employer’s contributions. Although there is no standardized format for payslips, it should include the following elements: employee identification details (name, surname, ID employee, job position), pay period, gross salary and wage components, deductions, garnishment, net salary.

Key reporting obligations

In Romania, employers have the obligations to submit the monthly payroll return D112 to the Tax Authorities by 25th of the next month for the previous one. This statement includes details on salary income tax, social security and health insurance contributions for each employee.

Furthermore, employers have the obligation to maintain accurate employees’ records in the Electronic Register of Employees (”REVISAL”) which is submitted online to the Labor Authorities considering various legal deadlines for newcomers, contractual changes, leavers, etc.

Data protection

Data protection and confidentiality are critical in payroll management. Employers must comply with the General Data Protection Regulation (Regulation (EU) 2016/679 – GDPR), ensuring that employee’s data are processed securely and used solely for legitimate purposes. Access to payroll data have to be restricted to authorized personnel, and specific measures has to be taken to protect sensitive information during both processing and reporting.

Payroll outsourcing in Romania

Outsourcing payroll in Romania offers businesses a strategic solution to simplify operations, save costs, and ensure compliance with complex local regulations.

Benefits of payroll outsourcing in Romania

Outsourcing payroll function in Romania provides significant advantages for companies, particularly for complying with the legal and fiscal tax aspects. One of the primary benefits is the reduction of administrative burdens, allowing businesses to focus more on their daily strategy activities while leaving payroll management to specialized providers. Outsourcing process brings accuracy, as professional payroll providers leverage their expertise to ensure precise calculations and timely submissions, minimizing the risk of errors or sanctions.

Ensuring compliance for foreign companies

For foreign companies operating in Romania, outsourcing provides an effective solution for maintaining compliance with local payroll laws. Romanian legislation is frequently updated, and its understanding can be a real challenging for non-native businesses. A local payroll provider ensures adherence to both labour and fiscal tax regulations.

Choosing the right payroll provider in Romania

When selecting a payroll provider in Romania, businesses should carefully evaluate several factors to ensure a partnership that aligns with their operational and legal compliance requirements. Key considerations include the provider’s expertise in Romanian labour and fiscal tax laws, their technological capabilities, and their ability to deliver tailored solutions for specific industries or company sizes. In particular outsourcing services bring added value from an advisory perspective as well as technical skills.

Data security is also a critical aspect, as payroll processes involve managing sensitive employee information that must adhere to GDPR standards. Lastly, the quality of service delivery, along with the provider’s responsiveness and communication, plays a vital role in promoting a successful collaboration.

Challenges and compliance risks

A significant hurdle is navigating frequent legislative updates, such as changes to income tax rates, minimum wage thresholds or non-taxable benefits. Additionally, understanding the specifics of Romanian labour laws, including collective labour agreements and different employment contract types, can be complex. Language barriers and differences in local business practices may further complicate compliance efforts.

The most frequent compliance risks that arise from payroll errors or delays are:

• inconsistent wage calculations, incorrect application of taxable and non-taxable thresholds;
• delays in submitting mandatory returns can result in both penalties and damage the Company’s reputation.

Starting with income from January 2025, Government Emergency Ordinance No. 156/2024 eliminates tax exemptions for employees in the IT, construction, and agri-food sectors. As a result, companies must ensure accurate payroll calculations and timely tax adjustments to remain compliant and avoid penalties.

Penalties

Non-compliance with Romanian payroll regulations can result in significant penalties, underscoring the critical need for accurate and timely payroll management. Fines may be imposed for delays in submitting mandatory returns, inaccurate reporting, or failure to record and submit the general electronic register of employees (REVISAL).

In accordance with Government Decision No 905/2017 on the general register of employees, these sanctions vary depending on the severity and nature of the violation, with labour inspectors being able to impose fines ranging from RON 300 to RON 8.000.  Also, the employers can be sanctioned for non-compliance with declaring the contractual documents for newcomers to the Labor Authorities up to RON 20.000 per undeclared worker (this is considered black work).

Additionally, in accordance with the Code of Fiscal Procedure interest and late payment penalties are due for failure by the debtor to pay the principal tax liability on the due date. For example, the interest rate is 0.02% – for each day of delay and the late payment penalty rate is 0.01% – for each day of delay. Interest and penalties for late payment shall be calculated from the day immediately following the due date up to and including the date on which the amount due is extinguished and shall be credited to the budget to which the principal debt is due.

Failure to comply on time with the obligations to declare, as required by law, taxable assets and income or, where applicable, taxes, duties, social security contributions and other amounts, as well as any information related to taxes, duties, contributions, taxable assets and income, if the law provides for their declaration (fines between RON 500 and RON 5.000).

Why a deep understanding of Romanian payroll matters

A comprehensive understanding of Romanian payroll legislation is crucial for companies, given the complexity and constant evolution of the country’s payroll framework. Non-compliance can lead to significant financial penalties, legal disputes, and damage to a company’s reputation. With frequent updates to tax laws and employment regulations, businesses have to remain up to date to avoid costly exposure and ensure they are complying with all their legal obligations.

To ensure successful and compliant payroll operations in Romania, businesses should strongly consider partnering with a professional payroll service provider. A trusted provider can handle the complexities of Romanian labour laws, tax regulations and social contributions, ensuring compliance and reducing the risk of misleading reporting. They can also manage the transition process with confidence, integrating existing systems, adapting to local requirements and providing expert guidance. Partnering with a professional provider ensures both efficiency and resilience in payroll management.

Partnering with a local payroll expert or dedicated service provider simplifies end-to-end payroll activities in Romania by 80 %.

The payroll service provider ensures reliable and compliant payroll processing, using technology that is tailored to the client’s needs and industry, and is in constant contact with government institutions to ensure the correct implementation of legislative changes and requesting written opinions to identify the practical enforcement of the lawmaker’s interpretation. Besides its technical capabilities, the partnership with the service provider becomes a trusted advisor to companies, with the function of managing exposures in the associated areas.

Outsourcing payroll services in Romania to a local expert reduces overheads, minimises risk and allows companies to focus on growth while ensuring efficiency and full compliance.