A comparative study by Romanian Business Leaders (RBL) on payroll taxation in 16 European countries shows that labor taxation in Romania is one of the most burdensome compared to the total costs borne by the employer.

Thus, Romanian workers have the smallest amount of money after paying taxes and fees to the state budget, compared to the rest of the analyzed countries. A simple calculation shows that with a monthly gross salary of 1,000 euros (5,000 lei), Romanians have the lowest net salary.

While a Romanian worker remains on hand with €572, in comparison, a Bulgarian worker remains on €653 and a Dutch worker on €746.

The main reason for this situation is the fact that, despite the single rate of tax on income from wages, Romania is one of the 6 countries (out of 16 analyzed) where social contributions are applied without limitation of income from wages. At the same time, most of the analyzed countries that have progressive taxes or differentiated tax rates have a maximum limit on social contributions to balance the overall tax burden on labor.

The comparative study draws attention to the fact that in the absence of the maximum limitation of social contributions (CAS and CASS), any increase in taxation (for example, a progressive tax) in our country will lead to an even greater decrease in the net salary that a Romanian worker would receive compared to workers in other analyzed countries, and to an even more pronounced drop in purchasing power compared to neighboring countries. Instead, the limitation of social contributions, in parallel with the introduction of higher deductions, especially for low wages, will make it possible to finally adjust the rate of the single tax on wages to balance this fiscal burden through its fair redistribution in society.

*Comparative analysis was carried out by RBL with the participation of expert members of the Tax Working Group, which analyzed the tax laws applicable to income from wages in 16 European countries. The study was conducted between May and August 2023 and analyzed the following countries: Austria, Bulgaria, Czech Republic, Croatia, Germany, Greece, Italy, Netherlands, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain and Hungary. .