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Individual Income Tax Not Applicable To Salary

Romania
7 Dec 2010

A Government Emergency Ordinance recently amended the norms relating to the taxation of income of a professional nature, other than salary. The amendments entered into force on 10 September 2010. Taxand Romania details the changes below.

According to the Emergency Government Ordinance No. 82/2010, income of a professional nature, other than salary, includes income from intellectual property and related rights and income from professional activities performed based on civil agreements/contracts. Any such income is subject to individual social contributions rates (ie pension contribution and unemployment insurance contribution).

Individuals that are part of a pension fund not integrated in the public fund, or who are pensioners, are not subject to individual pension contributions. In addition, individuals that have concluded unemployment insurance contracts are not subject to individual unemployment insurance contributions.

Individuals obtaining salary income and irregularly earning income of a professional nature from intellectual property and related rights are not subject to individual contributions for the income obtained from the latter activities. The concept of income received irregularly was redefined as income received "sporadically, without a regular nature".

The taxable basis for individual contributions shall be:

  • the income subject to income tax within the limit of 5 gross national average salaries applied on an annual basis (approx. EUR 2,200) for individuals that receive only income of a professional nature from intellectual property and related rights on an irregular basis
  • the monthly income subject to income tax within the limit of 5 gross national average salaries (approx. EUR 2,200) for individuals that receive regular income of a professional nature from intellectual property and related rights, whether or not they also receive salary income.

The obligation to calculate, declare, withhold and pay the individual contributions stays with the income payer.

Any payments in individual social contributions will be considered when calculating the supplies to the public pension system and unemployment fund.


Taxand's Take


The Government Emergency Ordinance repeals the norms enforced on 1 July 2010 and implicitly, starting the date of its entry into force (ie 10 September 2010), the contributions owed by freelancers will be those due prior to 1 July 2010. Similarly, health insurance contributions applicable to individuals who obtain income from intellectual property rights and civil agreements will be required in accordance with the provisions in force prior to 1 July 2010.

Your Taxand contacts for further queries are:
Cristian Radulescu
T. +40 21 316 06 45
E. cristian.radulescu@taxhouse.ro

Manuela Licu
T. +40 21 316 06 45
E. manuela.licu@taxhouse.ro

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