New rules on taxation of part-time employment contracts

The Government Ordinance no. 16/2022 for the amendment and completion of Law no. 227/2015 regarding the Fiscal Code, for the repeal of certain legislative acts and for other financial-fiscal measures (the “Ordinance”), was published in the Romanian Official Gazette no. 716 of July 15, 2022 and entered into force on July 18, 2022.

Among the amendments brought by the Ordinance to the Law no. 227/2015 regarding the Fiscal Code, we highlight below the main rules on taxation of incomes earned from part-time employment contracts:

In the case of people earning income from salaries or assimilated to salaries based on a full-time or part-time individual employment contract, the social security contributions owed by them shall not be less than the contribution resulting from computing its quota to the minimum gross basic salary in force in the month for which the contribution is due, corresponding to the number of working days in the month in which the contract was active.

In a more simplified manner, the amendment brought by the Ordinance is that the monthly basis for calculating the social security contribution and the health insurance contribution is the minimum gross basic salary, for incomes earned based on individual part-time employment contracts whose level is below the level of the minimum gross basic salary. Thus, the income considered will be the minimum basic gross salary in force in the month for which it is due the contributions and not the income earned by the employee.

For instance, if the salary to which the part-time employee is entitled under the contract is less than Ron 2,550 per month, the social security contributions shall be computed to the  minimum gross salary of Ron 2,550.

As regards the difference between the social security contributions computed to the actual salary provided in the contract and the social security contributions computed to the minimum gross salary of Ron 2,550, the Ordinance expressly provides that it will be borne by the employer.

Mentioned should be made that the taxation rules brought by the Ordinance does not apply to the income tax or to the labor insurance contribution, these tax rates being applied as before, in relation to the salary established in employment the contract.

However, this taxation rules do not apply to the following categories of people:

  • pupils or students, aged up to 26 years, in a form of schooling
  • apprentices up to 18 years old
  • persons with disabilities or other categories of persons who are recognized by law as having the possibility to work less than 8 hours a day
  • pensioners for the age limit in the public pension system, with the exception of pensioners for the age limit who benefit from service pensions based on special laws/statutes, as well as those who accumulate the pension for the age limit from the public pension system with the pension established in one of the pension systems not integrated into the public pension system
  • people who, during the same month, earn income from salaries or assimilated to salaries based on two or more employment contracts, and their cumulative monthly calculation base is at least equal to the minimum gross basic salary.

In applying the above exceptions, the employer shall request supporting documents from the employee. However, for the last category of exceptions abovementioned, the procedure on how to apply it shall be established by August 14 through an order of the Ministry of Finance.

Silvia Dumitrache – Senior Associate

Laura Ghinea – Senior Associate

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