The Government approved on Thursday the OUG comprising the measures needed to preserve net wages that professional groups exempted from income tax and part-time employees received in December 2017.
For the tax-exempt categories, employers will not make an additional financial effort, as the state assumes the compensation for a part of the healthcare social contribution (CASS).
Persons targeted:
- IT employees active in software development activities
- employees in R&D and innovation fields
- workers carrying out seasonal activities
- employees with disabilities, from the category of severe or worsened disabilities
With the important mention: Granting the incentive is conditional upon the increase of the gross wage by at least 20% compared to the level in December 2017, considering the transfer of the tax burden of social contributions from the employer to the employee.
The measure is valid for 2018.
Calculation:
It is applied to the employee’s gross income to obtain the share of the health social contribution that is to be offset from the budget so that the net income in January 2018 is not lower than in December 2017
Example:
- An employee who had a monthly gross income of 10,000 lei in December 2017 paid a health insurance contribution of 550 lei.
- If the employer increases the gross income by 20%, the employee would have a gross monthly income of 12,000.
- Following the transfer of the tax burden, this employee would have to pay CASS of 1,200 lei and a social security contribution of 3,000 lei.
- After applying the incentive from these regulations, it will be withheld CASS of 650 lei for the employee and the state will compensate the due difference, namely 550 lei, in order to avoid the net income reduction.
The amount representing the positive difference between the social health insurance contribution due and calculated based on the Fiscal Code provisions and the social health insurance contribution withheld is established by the employer and indicated separately as an amount deducted, in the Statement of payment obligations for social contributions, income tax and nominal accounts of insured persons.
To apply these provisions, implementing rules will be issued by order of the President of the National Agency for Fiscal Administration within 15 days from the entry into force of the emergency ordinance.
Persons who carry out the same type of activity but are employed in public institutions do not benefit from this exemption, as their salaries have been increased as of January 1, 2018, to offset the application of the tax burden transfer.
Part-time employees
OUG establishes a rule that applies to all part-time employees, both in the public and private sectors.
Unlike the solution developed for those exempted from the income tax, this measure will be borne by the employer, be it state or private.
Starting January 2018, for individuals who have part-time employment contracts, there will be withheld social security and health insurance contributions based on their gross income and the difference to the level of the contributions corresponding to the minimum national wage will be borne by the employing public institution or the private employer, on behalf of the employee.
In the absence of such a regulation, employees with ¼ time fraction jobs would have been forced to bring money from home to pay their debts to the state, since contributions are based on a full-time minimum national wage, even in the case of a work contract for two hours a day.
Therefore, after transferring the employer’s social contributions, for all work contracts of less than 665 lei, an employee would have been charged with higher amounts than the net salary.
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