Companies in the IT sector will have access state aid scheme in the next three years so they can maintain the net salaries of their programmers at the current levels after the fiscal changes to become effective on January 1, 2018.

Romania’s Government approved a memorandum on Thursday, December 28, to maintain a special status for IT programmers so that their income is not affected by the transfer of social contributions from employers to employees.

Next, the Government will approve a special state aid scheme targeting companies that hire IT programmers, research & development employees, people with disabilities and seasonal workers. The scheme will allow these companies to maintain their employees current net salaries with no extra costs after a series of fiscal changes come into force at the beginning of 2018.

The scheme will have a budget of RON 300 million (EUR 64.5 million) for three years, which will be granted in the form of non-reimbursable financing to some 2,920 companies per year.

IT programmers, research & development employees, people with disabilities and seasonal workers currently benefit from a special status and don’t pay any income tax.

Starting January 1, 2018, when all social contributions will be moved from employers to the employees, these categories of employees that have special status will be affected as the companies employing them would have to increase their personnel costs to maintain their net salaries or cut their net salaries to keep the personnel costs at the current levels.

IT employees in Romania could lose EUR 3 mln per month from next year

The Government decided earlier this year to transfer all social contributions from the employers to the employees. At the same time, the individual income tax will drop from 16% to 10% of the gross salary. Following these changes, employers should increase the gross wages of their employees by 20% to maintain their current net salaries, which would also allow them to keep personnel costs at the current levels. However, the measure affects employees that currently pay no income tax, including IT programmers.

The IT sector has increased its contribution to Romania's economic growth in recent years as many international companies have opened IT centers in Bucharest and other big cities. IT programmers are among the best-paid employees in the country.

The Government’s fiscal changes, which were implemented in a very short time frame, have been widely criticized by local business organizations.

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editor@romania-insider.com