As the new limits on interest, dividend (and other investment) income have been introduced, the question remains: do I still have to pay CASS if I’m an employee and have already paid? “Short answer: Yes!”, says Dan Manolescu, president of the Chamber of Tax Consultants (CCF) in an interview with HotNews.ro.

During the discussion we touched on several topics, from the transition from micro-enterprise to for-profit and vice versa (see the second part of the text), continuing with questions related to the taxation of tips and the payment of CASS for those who already pay health care contributions from wages and have investment income.

*The clip is divided into parts to make it easier to follow

Why should individuals pay CASS for investments, even if they receive a salary

Of course, this is the law. Write in the Fiscal Code. CASS must be paid according to the thresholds: 6, 12 and 24 minimum wages.

“Unfortunately, we in Romania no longer have an upper limit of social contributions. I had pension contributions for a while. We had 1-2 months at the beginning of 2017 when we had a higher ceiling and were at the level of the pension contribution,” explained Dan Manolescu.

According to him, at the moment, we do not have an upper ceiling, which is why we somehow have several categories, several buckets, in which different incomes are collected, on which different types of contributions are calculated.

• “We have a general rule that for all wage-related income, we have all the taxes that apply to all income, no matter how high: 10% income tax, 10% medicare contribution and 25% of the pension contribution.

• We have another category of income from independent activities, from copyrights, which have a different taxation regime. We have an income tax, but there we already have a maximum ceiling of 6, 12, 24 minimum wages.

• We still have a limit for another bucket that collects other types of investment income, and the rest that in certain situations health care contributions are mixed with self-employment contributions. As for the pension contribution, it no longer interferes. That is, investment income is no longer considered the basis for calculating the pension contribution.”

Manolescu said that in Romania we do not have the globalization of these sums.

“That’s where the debate comes from, that there’s no longer that overall upper-level cap, and we’re judging them piecemeal. If we judge by parts, then we have a situation where a person who receives income from wages pays wages in full, and if he also receives other incomes, he also pays there, limited to these 6, 12, 24. We judge them in parts, we don’t “We don’t look at them as a whole, and therefore at these problems,” the president of the Chamber of Fiscal Consultants noted.

• Is it good or bad? It is logical that if a person lives only on investments, then they should be insured and pay. Now we come to the debate: Is it good for a person who lives on investments alone and earns the same income as a person living paycheck to paycheck to pay less because they pay a cap?

“It’s actually a problem that we haven’t been able to solve, and it doesn’t look like we’re going to solve it anytime soon, because we already have distortion. Any adjustment creates other distortions or other magnifications, because someone can say, “I was good now!” he explained.

Then, he says, we get into a situation where some are winners and others are losers, and so everyone pays more or less according to the situation they’re in at any given time, and we go ahead.

During the interview, I also touched on the topic of micro-entrepreneurship, especially since tax changes came into force on January 1, 2023.

What companies need to know when transitioning from a micro-enterprise regime to a profitable one and vice versa

What changes at the conceptual level due to the changes in OG 16 is that, while previously the main rule was that all companies were micro-enterprises, and those that met certain conditions (share capital exceeding 45,000 lei and at least 2 employees were able to transfer for income tax, based on the new changes, everything is the opposite.

Generally, all companies are considered corporate tax payers, and if they meet certain conditions, they can elect micro status.

See what the conditions are for being a micro-enterprise.

What should those who used to be a microorganism do, do they still need to turn on or not?

“From the discussions with ANAF representatives, it became clear at the moment that at the formal level, ANAF is no longer waiting for a statement about the option, as this declaration will change something in the fiscal vector,” Manolescu said.

• Those who already have micromode do not need to change it. It is believed that the choice was made implicitly through the retention of the same micro-taxation regime.

According to him, those who were previously subject to income tax because they chose at some point – because they met the conditions to do so – and feel that now they would like to be micro-taxed because this the system is beneficial to them, they must submit a declaration and change the fiscal vector.

• If they choose to be micro by meeting the conditions at the beginning of the year, and during the year it no longer meets the conditions, for example exceeds turnover, then they do not choose. He is obliged to switch to income tax from the corresponding quarter.

How to switch to income tax during the year if it suits you

If it no longer fulfills the condition regarding the presence of an employee and does not hire a person within 30 days, the company is obliged to switch to income tax.

“If I believe that the micro-regime is no longer favorable, then solving the problem of the number of employees is quite easy. That is, I can interrupt cooperation with the employee for a while if I really want to switch to the income tax regime,” explained Dan Manolescu.

Usually, he said, the year-round option is permanent and can only be canceled if the right is lost. Some conditions can also be lost at will.

• Usually in this neighborhood, the worker is the owner, and then it is quite easy to adjust if the neighborhood is deemed no longer favorable.

“If at the beginning of the year he did not exercise the option of income tax, the option remains so until the end of the year. If the conditions are met within a year, he can no longer opt out. He could choose from January 1, 2024, if he meets the conditions that will be there then, because maybe those conditions change, maybe the cap changes. Let’s see what will happen,” the president of the Chamber of Fiscal Consultants also noted.

What happens to special regimes such as specific in Horeca

“This is an option for Horeca operators. This special tax regime was abolished from January 1, 2023, and OG 16/2022 somehow came with the possibility to leave the option to operators who have been greatly affected during these 2 years of the pandemic, to choose according to the situation in which it is necessary to switch to income tax or switch per micro regardless of the conditions we talked about earlier (turnover and so on),” Dan Manolescu said.

• Someone who was a special tax payer last year could be registered as a corporation tax payer, as we know the special tax applied to a turnover of more than €1 million. All those within the €1 million limit were micro-enterprises.

“Therefore, all those who were in Horeca and applied a specific tax could find themselves, some of them, in a situation of carrying out other activities that were not subject to a special tax and were registered as a payer of income tax,” he explained.

So, says Manolescu, in this situation, if they want to stay on corporate tax, they already have a corporate tax registration in Fiscal Vector, so they remain corporate tax payers.

“If they want to register as micro-tax payers because it is profitable for them, then they must submit a declaration on the registration of micro-enterprise income tax payers,” he explained.

From the same interview, see also: An ANAF inspector walks into a cafe and sees a tip jar. What the owner needs to know

Featuring a VIDEO interview

INTRODUCTION 0:00

2:53 What do those who used to be in microenterprise mode do: do they still have to agree or not?

6:15 What should Horeca do, since the special tax has disappeared

7:57 The tip tax actually comes with tax cuts. Why

13:20 What happens if someone tips more than 15% and what is the purpose of the restriction: money laundering

16:27 Taxation of tips highlights certain amounts

19:05 What we see in the US regarding the taxation of tips

20:38 In the West, there was a recent discussion about whether it is worth leaving tips in the conditions of raising the minimum wage. That may change over time

22:20 What cafe owners who have tea pots need to know in case of ANAF control

26:00 Do I have to pay CASS if I receive a salary but have other income?

See also:

Are you a PFA? What has changed in taxation since 2023

All the measures that come into effect from January 1 and affect your personal finances in 2023

From January 1, 2023, the excise duty on alcoholic beverages increased by 6%, i.e. by at least 2 lei/liter.