New rules for companies and individuals will enter into force from January 1, 2018. Local news agency Mediafax has compiled the most important changes that will impact local businesses and employees next year.

The split VAT system will enter into force for insolvent companies and firms with debts to the state budget. This will complicate the relationships between the firms that apply it and those that don’t apply it.

The social contributions will be fully transferred to employees, but the employers will still be responsible for paying the money to the state budget. Companies should increase the employees’ gross salaries by at least 20% so that their net salaries remain the same. Some companies will grant the 20% difference in the form of bonuses until the transfer of social contributions is clear from a legal point of view.

Employers’ failure to pay the social contributions will be sanctioned with prison between one year and six years from January 1, next year.

People who earn incomes from dividends, interest, other sources or independent activities will need to pay a 10% contribution for the health insurance. They were previously exempt from paying this contribution. People who have full-time jobs and also earns dividends will have to pay the contribution to health insurance both as an employee and for the dividend income.

The income tax will drop from 16% to 10% for all the taxable income, except for the dividend income, for which the income tax amounts to 5%.

The revenue threshold of a micro enterprise will be EUR 1 million, from January 1, 2018. The tax rate for a micro enterprise, with one full-time employee, amounts to 1%, whereas the tax rate for micro enterprises with no employees reaches 3%.

Romanians who leave the country for more than six months will be fined if they don’t notify the Tax Agency. They need to fill in and submit a residency form. The fine for failing to submit this form in due time will range between RON 50-100 (EUR 11-22).

The minimum gross salary will increase from RON 1,450 (EUR 311) to RON 1,900 (EUR 407). However, this will not translate into a significant growth in the net wage, because employees will need to pay higher social contributions.

The contribution to the mandatory private pension system will drop from 5.1% to 3.75% of the gross wage from January 1, 2018.

The guarantee ceiling for the First House program will drop from RON 2.67 billion (EUR 573 million) to RON 2 billion (EUR 429 million).

editor@romania-insider.com