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Payroll in Romania – 2022 Updates
From 1st of January 2022, Romania raised gross minimum wage to 2,550 lei (515 euro).
Employees are only paid the minimum gross base salary for a maximum of 24 months. When this period expires, employers are required to pay the respective employees a higher salary.
Starting with 1st of June 2022, for the amount resulting from the increase of the minimum statutory gross wage, respectively RON 2,550 per month, bonuses or other additions not included, to 2,750 lei per month, no income tax and compulsory social contributions will be due.
Romania Payroll – Basic Facts
The official currency in Romania is the Romanian Leu (RON).
Income Tax
Romanian citizens are considered Romanian tax residents and are taxed on their worldwide income except for their salary income received from abroad for work performed abroad, which is a tax exempt.
Romanian citizens not domiciled in Romania and foreigners, regardless of their domicile, are taxed in Romania only on income sourced in Romania.
There is a flat income tax rate of 10% generally in place, however, there are certain exemptions.
The tax year in Romania runs from January 1st through to December 31st.
Social Tax
Employee contributions:
- Social security contribution: 25%
- Health insurance contribution: 10%
Employer contributions:
- Social security contribution: 4% for particular working conditions or 8% for special working conditions
- Labor insurance contribution: 2.25%
Certain exemptions apply for the construction sector.
Social contributions may fall in the individual’s obligation of reporting and payment if it was agreed with the foreign employer, in case that the foreign employer is based in the EEA or in a country that concluded a social security agreement with Romania.
The general deadline for both reporting and paying the income tax and social contributions is the 25th day of the month following the one the salary income relates in.
Corporate Tax
The standard CIT rate is 16% for Romanian companies and foreign companies operating through a permanent establishment in Romania.
Withholding Tax
All income obtained by non-residents from Romanian taxpayers for the provision of services rendered in Romania or for management and consultancy services are subject to 16% withholding tax in Romania.
Non-resident companies not operating thought a permanent establishment are subject to a 16% withholding tax on revenue sourced in Romania, such as interest, royalties, revenue from services, commissions and revenue derived from liquidation of a Romanian legal entity.
- Dividends: 5% (for non-residents)
- Interest: 10%
- Royalties: 10%
Value Added Tax
The standard VAT rate in Romania is 19%.
A reduced rate of 9% applies to water, food & beverage industry, medical treatments and prosthesis, accommodation etc.
Extra-reduced rate of 5% applies to supplies of social housing under certain conditions and to schoolbooks, hotel accommodation, restaurant and catering services, newspapers, magazines, admission fees to castles, museums, sport events, cinemas etc.
Compensation and Benefits
Minimum Wage
In 2022, the national minimum wage in Romania remained fixed at €515.3 per month, that is 6,184 euros per year, considering 12 payments per year.
Overtime
Overtime hours will be paid with a minimum of 75% increase to the salary. The increase can be negotiated within the company.
Hours of Work
The working day has 8 working hours and the week 5 days (40 hours per week). The maximum working time for a week cannot surpass 48 hours per week, including overtime.
Holidays
There are 15 public holidays in Romania in 2022.
Leaves
Employees are entitled to a minimum of 20 vacation days per year (working day, not calendar day).
For medical reasons, the employee is entitled to a medical leave allowance in amount of 100% or 75% of the average 6 months gross salary prior to illness period, depending on the cause of the incapacity.
The employer is obliged to pay the remuneration for the first 5 days of incapacity from the medical leave period. The rest of the period is paid by the Romanian state, however, the employer shall credit the state with the amount paid to the employee. In maximum 90 calendar days, the employer should file a compensation request for above amounts to Romanian Health Insurance House.
In cases of special family events, the employees have the right to paid days off. To solve special personal situations, the employees have also the right to ask for unpaid days off.
Foreign workers in Romania
Visa Requirements
Romania is a member of the European Union, however, the country is not a part of the Schengen agreement and regulates its own visa policy within the legal framework of the EU.
Romania has many bilateral or multilateral visa agreements with different countries all over the world that eliminates lengthy visa processes. Citizens of some countries are allowed to stay in Romania for 90 days in 180 days period without a visa.
Romania visa types:
- C Type (Short-Term) Visas
- Romania Touristic Visa
- Romania Business or Fair Participation Visa
- Romania Family, Relative or Friend Visit Visa
- Romania Cultural, Sports or Conference Visit Visa
- Romania Short-Term Education or Internship Visa
- D Type (Long-Term) Visa
- Romania Transit Visa
Taxes
An individual is considered a tax resident in Romania if he/she is present in the Romania for at least 183 days (in aggregate) in a calendar year.
All other individuals are treated as Romanian tax non-residents. Residents of the EU are covered by the provisions of EC Regulation 883/2004 regulating social security and health insurance rules in case of cross-border activities.
For more information about how our Global Payroll Control Platform integrates with local payroll providers in Romania, contact us today.