Romania Budget Revenue Would Drop By RON700M With New Pension Tax Exemption Cap

In 2009, out of 4.7 million Romanian retirees, nearly 800,000 got monthly pensions of RON1,001 -RON1,500, namely a total of about RON12 billion per year. Also last year, 150,000 retirees had monthly pensions of RON1,501 to RON2,000, bringing the total to some RON3.1 billion.

The 16% income tax levied on pensions between RON1,000 and RON2,000 brought in annual budget revenues of about RON600 million (over EUR140 million). Counting the income tax levied on pensions ranging between RON1,000 and RON2,000 of lawyers and former employees in defense, national security and public order, the state budget would register even more losses.

Romania's Chamber of Deputies has adopted a bill amending the Tax Code, whereby pensions lower or equal to RON2,000 are exempt from income tax. So far, only pensions lower than RON1,000 were exempt from the tax.

The bill was rejected by the Senate in May but adopted by the lower house Tuesday with 286 votes in favor, two against and two abstentions.

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