Fri | 29.07.2022
Mazars publishes CEE Tax Guide 2022
Mazars released the tenth edition of the Mazars Central and Eastern European tax guide. The report on the current taxation regimes of the CEE covers 22 countries: it includes the Visegrad countries, Southeast Europe, Germany, Austria, Moldova, Ukraine, and the Baltic states. Its purpose is to help investors compare the fundamental factors of competitiveness.
Mazars’ analysis found that labor costs are decreasing in almost all observed countries, but the actual drop size shows significant differences. The basic approach to income taxation also varies in the region: some countries continue to enforce flat-rate income tax rates (such as Bulgaria, Hungary, and Romania), while others maintain significantly progressive tax rates (e.g. Austria, Germany, and Slovakia).
In the listed countries, average labor costs burdening the employers amount to 15% of gross wages. Still, there are significant differences - over 30 percentage points - between the lowest, less than 5% in Romania, and the highest of over 30% (e.g. in the Czech Republic, Poland, and Slovakia). This highlights that tax systems are hard to compare but also indicates whether governments prefer to shift the burden of labor costs to employees or employers.
A more practical way of comparing systems is the so-called tax wedge, which shows what percentage of total income the state takes away in taxes and contributions. It shows the extent to which a tax on labor income discourages employment, i.e., what percentage of labor costs is paid into the state budget in some form. The indicator varies between 15 and 51% in the region, mainly depending on income levels and family status.
The countries in the region show the most significant variation in wage levels. Minimum wages in the V4 countries range between €500-€650; they are significantly lower in the Balkans and Moldova (below €400) and are not comparable to those over €1,700 in Germany and Austria.
The euro-based average wage in the private sector grew by more than 12% on average, totaling 14% and 19% in Serbia and Hungary, respectively. Average gross wages are highest in the Czech Republic among the V4 countries at around €1,300.
„In Romania, starting from 1 January 2022, the minimum monthly gross wage, without including bonuses or other benefits, has increased from RON 2,300 to RON 2,550. When referring to the average salary in the private sector, the value in Romania has reached RON 6,095 from RON 5,429 in 2021. If at the beginning of the COVID-19 pandemic, the main requirement for job seekers was represented by the job stability, now, the rising inflation is a significant challenge.”, mentioned Edwin Warmerdam, Partner, Head of Tax, Mazars Romania.
Read more info HERE.
Five reasons your business needs a tax strategy, by Mazars
Over the past decade, but especially in the last two years, the entire business environment was challenged with meeting the demands of many brisk legislative changes and increased audits. And, as the digital wave has become stronger, the adoption of new technologies in the tax function has also gained further momentum.
In today’s tax landscape, many companies are changing their strategies, as the tax practice needs to deliver more value to the overall business. And like in every business decision, after all the essential factors are analysed, many opportunities can arise. In this particular case, the outsourcing of certain tax activities could offer solutions, as well as numerous benefits for the company.
Mazars’ approach is always to configure the right solution for the specific needs and strategies of a business. Interested in finding out more?
Read more info HERE.
Latest tax alerts, by Mazars
Mazars’ professionals are constantly preparing materials to help you stay up to date with the latest legislative measures.
Major Fiscal Code modifications
On 15.07.2022, The Ordinance amending and supplementing Law no. 227/2015 on the Tax Code, repealing certain normative acts and other financial-fiscal measures was published in the Official Gazette no. 716, Part I.
New amendments to the Tax Procedure Code & Tax facilities in the agricultural and construction sectors
Emergency Ordinance no. 102/2022 amending and supplementing Law no. 207/2015 on the Tax
Procedure Code was published in the Official Gazette no. 654.
News on RO e-Transport System
On 30 June 2022, Emergency Ordinance No 106/2022 and Order No 1190/2022 approving the Procedure for the use and operation of the national system for monitoring the transport of goods with high tax risk RO e-Transport was published in the Official Gazette.
Read more info HERE.
This article is provided by our Finance Partner, MAZARS Romania