February 4, 2019 Legislative Newsletter

  • Emergency Ordinance No. 114/2018
  • Decision no. 1045/2018
Emergency Ordinance No. 114/2018
Emergency Ordinance no. 114/2018, published in the Official Gazette Part I no. 116 of December 29, 2018, establishing certain budgetary, tax and public investment measures, amending and supplementing several normative acts and extending some deadlines, brings the following clarifications:
Comment: This Emergency Ordinance amends and supplements several normative acts, of which we mention the following:
  • Law no. 52/2011 – regarding the occasional activities carried out by day laborers;
  • Law no. 227/2015 – on the Fiscal Code with subsequent amendments and supplements.
Law no. 52 / 2011 – Supplemented with provisions stipulating that an individual cannot perform casual work for more than 120 days during a calendar year, irrespective of the number of beneficiaries, except those carrying out activities in extensive livestock farming, seasonal activities within botanical gardens managed by accredited universities and also in the vineyard sector for whom the threshold has been set to 180 days in a calendar year. It is also noted that the beneficiary cannot use the same person for casual work for more than 25 continuous calendar days.
Unskilled work can be performed in the following fields that are listed in the National Classification of Economic Activities, updated:
  1. Agriculture, hunting and related services – Division 01;
  2. Forestry, except logging; – Division 02;
  3. Fisheries and aquaculture – Division 03.
Law no. 227/2015 – Among the amendments brought to the Fiscal Code we mention the ones regarding the construction sector. In accordance with the legal provisions established by this Emergency Ordinance, for the period January 1, 2019 to December 31, 2019, in the construction sector, the minimum gross base salary per country guaranteed for payment, excluding bonuses and other benefits, is set to the amount of 3.000 lei per month, for a normal work schedule of approximately 167,333 hours per month, representing 17,928 lei / hour.
This salary applies exclusively to the fields of activity provided by Art. 66 point 1 of this Emergency Ordinance.
In addition to the above, this Emergency Ordinance stipulates that between January 1, 2019 and December 31, 2028, the employees whose employers carry out activities in the construction sector shall benefit from certain tax incentives.
These tax incentives are:
  • Tax – Exemption from payroll tax;
  • CAS (Social Security Contribution) – Reduction of the quota of the social security contributions by 3,75 percentage points (25% -3,75% = 21,25% CAS). Individuals benefiting of this reduction and who owe contributions to the privately administered pension fund regulated by Law no. 411/2004 on the Privately Administered Pension Funds, are exempt from this contribution within the limit of 3,75%.
  • Are not included in the calculation basis of the social security contribution due by the employers who carry out activities in the field of construction and fall within the provisions of the Emergency Ordinance, those salaries or similar income earned by natural persons on the basis of individual employment contracts signed with such employers. (This exemption refers to situations where the activity is carried out under special or other conditions – in which case employers owe social insurance contributions of 4% and 8% respectively).
  • CASS (Social and Health Insurance contribution) – Exemption from the payment of the social health insurance contributions. Individuals who work on the basis of individual employment contracts with employers who carry out activities in the construction sector and fall within the provisions of the Emergency Ordinance (which will be listed below), are insured – during the period previously mentioned – in the social health insurance system without the payment of the contribution.
  • CAM (Work insurance contribution) – Reduction of the work insurance contribution meaning that, during the granting of the tax incentives, employers will owe only the percentage (from the CAM) that is paid to the Guarantee Fund for outstanding salaries. We mention that from the work insurance contributions collected to the state budget, a 15% share is monthly distributed to the Guarantee Fund for the payment of outstanding salaries, therefore employers shall bear a contribution rate of 0,3375%.
The tax incentives are granted on the basis of the following conditions set by the Emergency Ordinance:
A. Employers carry out activities in the construction sector that include:
(1) construction activities defined by the NACE codes 41.42.43 – section F – Constructions;
(2) manufacturing of building materials, defined by the following NACE codes:
2312 – Shaping and processing of flat glass;
2331 – Manufacture of ceramic tiles and flags;
2332 – Manufacture of bricks, tiles and construction products, in baked clay;
2361 – Manufacture of concrete products for construction purposes;
2362 – Manufacture of plaster products for construction purposes;
2363 – Manufacture of ready-mixed concrete;
2364 – Manufacture of mortars;
2369 – Manufacture of other articles of concrete, plaster and cement;
2370 – Cutting, shaping and finishing of stone;
2223 – Manufacture of builders’ ware of plastic;
1623 – Manufacture of other builders’ carpentry and joinery;
2512 – Manufacture of doors and windows of metal;
2511 – Manufacture of metal structures and parts of structures;
0811 – Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate;
812 0812 – Operation of gravel and sand pits; mining of clays and kaolin;
711- Architectural, engineering and technical consultancy services.
B. At least 80% of the total turnover of the employer comes from the activities referred to in point A. The turnover is calculated cumulatively from the beginning of the year up to the the month when the exemption is applied.
C. The gross monthly earnings from salaries and similar income, gained by individuals for whom the exemption applies, range between 3.000 and 30.000 lei per month inclusive and are earned on the basis of the individual employment contract;
The text of the normative act states that the exemption applies according with the instructions of the Joint Order of the Minister of Public Finance, the Minister of Labor and Social Justice and the Minister of Health, stipulated in Art. 147 par. (17), and the Statement on the Payment of Social Contributions, Income Tax and Nominal Records of Insured Persons (Form 112) represents an affidavit for the fulfilment of all the conditions required to apply the exemption.
Decision no. 1045/2018
Decision no. 1045/2018, published in the Official Gazette Part I no. 24 of January 9, 2019, approving the Methodological Norms for the application of Law no. 165/2018 regarding the granting of value tickets, brings the following clarifications:
Comment: According to the methodological norms, the value tickets can be used only for the purpose provided by Law no. 165/2018 regarding the granting of value tickets, the tax regime applicable to meal tickets, holiday vouchers, gift vouchers, childcare vouchers and cultural vouchers are those provided by the Fiscal Code (both for beneficiaries and for employers / taxpayers).
With regard to cultural vouchers, the current provisions state the following tax regime:
  • For the employer, they represent expenses with limited deductibility;
  • For the beneficiary, represent in-kind benefits when determining the income tax.
With regard to meal tickets, the current provisions state that the number of meal tickets received monthly by employees, shall neither exceed the number of days worked, nor the number of working days within the month for which the tickets are given. In the case of individuals employed on the basis of an individual part-time employment contract as well as in the case of a combination of positions held, value tickets, except for gift vouchers and cultural vouchers, may be granted only by employers where the employees in question hold their main position, according to the law.
If the main position held cannot be determined, the beneficiary of the value tickets chooses in writing the employer who will grant them the value tickets. The beneficiary must notify their choice to all the other employers, within maximum 10 working days.
In the case of employees whose daily working hours exceed 8 hours – under a shift-basis system, the number of days for which meal tickets are granted is determined by dividing the number of hours during which the employee was present at work by the usual 8 working hours. The number of days resulted shall not exceed the number of working days in the month for which the vouchers are granted.
With regard to gift vouchers, we mention that it is expressly stipulated that employees can benefit from gift vouchers given by their employers only for destinations or events that fall into social expenses.
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