Legal News by BBW LAW, June 2022

Fri | 10.06.2022

Legal

LEGAL INSIGHTS

Obligations for foreign companies contracting employees in Romania

Remote, hybrid or flexible work arrangements have quickly become the new normal at work. On employers’ side, this allows companies to hire employees globally, without necessarily creating a local structure.

As a foreign entity it is possible to enter into employment agreements with employees based in Romania.

Foreign companies contracting employees in Romania have however to check and comply with specific requisites in the field of social contributions and tax:

Romanian employees working in Romania are subject to social contributions in Romania irrespective if the employer has a local structure or not

Foreign employers have the obligation to compute, withhold and pay the social contributions for local employees in Romania and for doing this they have to prior register for payroll purposes in Romania (D015). A further tax return (D112) has to be submitted monthly.

An alternative is to enter into a tax agreement with the local employees whereunder the foreign employer is paying the gross salary and the local employees are submitting the monthly tax return (D112) and paying the social contributions directly.

Romanian employees working in Romania are subject to income tax in Romania irrespective if the salary is obtained in Romania or from abroad

Foreign employers have the obligation to submit an initial tax return (D222) announcing the date of employment of each local employee.

The local employees have further the obligation to submit monthly tax returns (D224) in respect of the salaries obtained from abroad and pay the related income tax.

This aspect has to be considered by employees working for a foreign employer, since they have additional formalities to carry out in relation with the tax authorities compared to employees working for local employers where all the formalities are at the charge of the employer.

LEGAL NEWS

Benefits for employees working in agriculture and food industry (Law no. 135/2022)

The minimum wage for employees working in agriculture and food industry has been increased to 3,000 RON starting with June 2022 (compared to the standard minimum wage of 2,550 RON applicable in 2022).

In the same time, the salary of employees working in agriculture and food industry have been placed under a preferential tax regime (no income tax, reduced social security contributions). The preferential tax regime is dependent on the employers obtaining at least 80% of their turnover from agriculture and food industry related activities and is capped for salaries above 30,000 RON.

These benefits are intended to apply from June 2022 until 31 December 2028.

Reduced rate for the capital gains as of 2023 (Law no. 142/2022)

Currently, the tax on capital gains derived from the sale of shares in publicly held companies is of 10% and applies on an annual cumulative basis.

Starting with 2023, the tax on gains derived from the sale of shares in publicly held companies will be of 1% for gains on disposal of shares held more than 365 days / 3% for gains on disposal of shares held for 365 days or less. The capital gains tax will be due per each operation, while the losses will not be recognized for setoff or carry forward anymore.

The 1% / 3% capital gains tax applies to the extent the transactions are made through an intermediary established in Romania.

Direct access of employees/former employees to the data in the employees’ registry (Law no. 144/2022)

Employees and former employees will soon be granted the possibility to access the employees’ registries online. They should be able to download and print the data related to them from such registries and use such excerpts for proving the length in service.

Methodological norms are expected to follow to detail the practical way of access.

Disclaimer: The information provided herein is in no way exhaustive and does not, and is not intended to, constitute legal advice. Readers of this Article should contact their attorney to obtain advice with respect to any particular legal matter.

This article is provided by our Legal Partner BBW LAW l BORA BANU van de WAART.

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