Romanian Govt To Levy Tax On Employee Bonuses Higher Than RON150

The draft ordinance states that financial aid to cover the cost of funerals, losses caused by natural disasters, birth, serious and incurable illnesses, transport to and from the workplace, treatment and rest services, as well as gifts to employees' minor children or to female employees, as provided by the collective labor contract, shall not be subject to taxation for the purpose of social security contributions.

On the other hand, bonuses granted on various occasions, with a value exceeding RON150, will be taxed.

The draft ordinance also says Romanians who gain income from freelance activities will pay, starting with 2011, social security contributions of at least 25.36% and up to 35% of their income, nearly double from the current level of contributions. Under current law, they pay social security contributions in the amount of 16.5% of their income.

Furthermore, the pension insurance contribution is to increase to 24.43% from 10%, the health insurance contribution is to increase to 8.35% from 5%, while the contribution to the unemployment aid fund is to increase to 0.78% from 0.5%.

The draft also introduces a contribution of 0.85% for vacations and social health insurance indemnities and an insurance contribution of 0.15%-0.85% for labor accidents and professional diseases.

The draft ordinance amending Law 571/2003 on the Fiscal Code was put up for public debate on Thursday. It should enter force on January 1, 2011, and be applicable to income earned in January 2011.

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