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85% income tax rate for certain incomes
The Romanian Government has published an emergency ordinance regarding fiscal-budgetary measures and the amendment of several regulations including an increase in income tax rate in certain situations. Taxand Romania discusses the impact of this 85% personal income tax rate.
By way of derogation from the provisions of article 43 of the Fiscal Code, the personal income tax rate will now be 85% for salaries, allowances or compensation granted at the termination of an employment contract to individuals holding management positions or to those appointed as Board members or to the Management Board.
The Emergency Ordinance does not provide for the context in which the employment contract is terminated (eg the contract may be terminated as a result of reduction and restructuring needs, passing in reserve, dismissals, collective redundancies etc.)
It should be taken into account that when the types of income mentioned above are not granted from the unemployment insurance budget, the following should be withheld from the gross amounts:
- The individual health insurance contribution
- The indiviual social security contribution - pension, for which the taxable base cannot be higher than the value of 5x the average gross salary