​The cap on income tax credits and social security contributions is one of the hot topics this fall because, in addition to the financial impact, it had a short effective time and, implicitly, uncertainty in implementation.

Daniel Angel, Ruksandra PopescuPhoto: PwC Romania

What additional explanations the authorities will provide, what other tax benefits can be explored, as well as what tax controls we can expect, these are the main questions discussed during PwC’s tax negotiations in Romania by Daniel Angel, Partner and Head of Fiscal and Legal Services. and Ruksandra Popescu, director. Tax Talks is a PwC Romania podcast that discusses important tax and legal topics for 15 minutes.

Watch the Tax Talks issue:

Key statements:

  • There are two main changes regarding the tax benefits for IT: the limitation of the income tax exemption, the exemption applies only up to 10,000 RON per month for one employer and the reduction of the social insurance contribution (CAS) corresponding to the percentage points for contributions to private pension funds – Level 2.
  • Panic has been created among employers due to a very short implementation period, lack of explanations and pressure from employees. What clarifications did the authorities make?
  • PFA and micro can be considered as alternatives, but be aware that any change of a fiscal nature in the way taxes are paid must also be based on an operational change and may trigger scrutiny by ITM and ANAF.
  • There are still unexplored tax objects that should be considered. what are these
  • We expect increased scrutiny by ANAF and recommend an analysis of alternative structures (PFA, micro-enterprises), if used, and whether other entities can be accessed to confirm all eligibility criteria for tax exemptions for workers.
  • From January 2024, meal vouchers and holiday vouchers will be subject to both income tax and CASS, placing an additional burden on the employee.
  • The maximum amount of CASS for PFA will increase to 60 minimum wages from 24 now.
  • From July 2024, income whose source cannot be verified will be taxed at a rate of 70% (from the current 16%).

Article supported by PwC Romania