Social contributions due by employers and employees on salary income derived from dependent activities are applied to a certain computation base. The contributions rates can be modified by the Social Security State Budget Law, by the State Budget Law, or by any amendments made directly to the Fiscal Code.
Social contributions liabilities are assessed in line with the EU social security coordination rules and the provisions of the social security agreements Romania applies.
The general social contributions rates are established as follows:
- Pension insurance contribution: 25%.
- Health insurance contribution: 10%.
The monthly assessment base is the gross income derived from dependent activities.
- Pension insurance contribution: 4% for particular working conditions or 8% for special working conditions; there is no employer pension insurance contribution for normal working conditions.
- Labour insurance contribution: 2.25%.
Certain exceptions apply in case of the construction sector, as provided by the law.
The monthly assessment base is the gross salary income derived by individuals, resident and non-resident, based on an employment contract (or a service relationship or special status), as well as revenues treated as salaries (administrators’ remuneration, director on mandate contract, etc.). Special exemptions are provided for each category of the social contributions.
Employers compute and withhold the social contributions when paying salaries. Social contributions must be declared and paid by the salary income payer to the relevant state budgets by the 25th day of the month following the one for which such salary income is paid.
For benefits in kind and/or in cash received from third parties based on an employment contract or a contractual relationship between parties, the obligation to compute and withhold social contributions belongs to:
- resident employers when the benefits in kind and/or in cash are granted by other parties and the payment is made through resident employers
- resident income payers when the benefits in kind and/or in cash are granted and paid by third parties that are tax resident (except for individuals who perform activity in Romania and obtain salary and salary assimilated income from foreign employers), and
- individuals when the benefits in cash and/or in kind are granted and paid directly to them by the income payers who are not Romanian tax residents, other than the employer. As an exception, in the case of individuals who obtained benefits in kind and/or in cash from non-resident third parties, the resident employer or the non-resident employer subject to the European applicable social security legislation / the social security legislation based on the applicable social security agreements can opt for calculating, withholding, and paying the Romanian social contributions due.
In addition to salary income, social contributions may be levied in respect of the following types of income:
- Income from independent/freelancing activities and intellectual property (IP) rights may be subject to the pension insurance contribution of 25% if the annual taxable income from these sources exceeds the value of 12 minimum gross national salaries (i.e. RON 30,600 for the year 2022). The minimum annual contribution due is capped at 25% of the annual assessment threshold, while individuals may opt for paying higher pension insurance contributions in order to increase their entitlement to social benefits.
- Income from independent/freelancing activities, IP rights, investment income, rental income, agricultural income, income derived from the association with a legal entity, and income from other sources may be subject to the health insurance contribution of 10% if the annual taxable income from these sources exceeds the value of 12 minimum gross national salaries (i.e. RON 30,600 for the year 2022). The annual contribution due is capped at 10% of the annual assessment threshold. Pension income above the monthly cap of RON 4,000 is subject to health contribution due (10%) for the part exceeding the cap.
New rules will apply as of 2023 for the minimum annual assessment threshold and value of the contributions due.
Value-added tax (VAT)
The standard VAT rate is 19%. The standard VAT rate is applied to all supplies of goods and services (including imports) that neither qualify for an exemption (with or without credit) nor for a reduced VAT rate.
See the Other taxes section in the Corporate tax summary for more information.
Net wealth/worth taxes
There are no net wealth/worth taxes in Romania.
Inheritance, estate, and gift taxes
No inheritance taxes apply in Romania, except in relation to transfer of real estate in certain circumstances. Gift taxes are not levied in Romania.
The building tax calculation method differentiates between buildings depending on their destination usage:
- Residential buildings: Tax rate between 0.08% and 0.2% (applicable to the taxable value as per the specific table provided by the law for individuals and the value resulted from the evaluation report for legal entities).
- Non-residential buildings: Tax rate between 0.2% and 1.3%. In the case of a building used for agricultural purposes, the applicable tax rate is 0.4%.
New rules will apply starting in 2023. According to OG no. 16/2022, tax of at least 0.1% (for residential buildings) or at least 0.5% (for non-residential buildings) will apply to the value of the building. For buildings used for agricultural activities, the buildings tax will be calculated by applying a rate of 0.4% to the value of the building.
The value will be calculated as the total value of the buildings, including any annexes, and the land areas covered by them included in the market studies of the indicative values of real estate administered by the National Union of Notaries Public in Romania.
Owners of land are subject to land tax established at a fixed amount per square metre, depending on the rank of the area where the land is located and the area or category of land use, in accordance with the classification made by the Local Council.
Similar to building tax, land tax is paid annually, in two equal instalments, by 31 March and 30 September. A 10% reduction is granted for full advance payment of this tax by 31 March.