Employees, retirees, and freelancers who earn an additional income from interest on bank deposits, dividends, and intellectual property rights will be charged an extra 5.5% of their income representing health contributions starting January 1. However, the taxation is capped at the equivalent of five average salaries calculated for one year.

This measure was provided by the Fiscal Code that entered into force one year ago. However, some of its provisions were postponed until January 1, 2017.

In the case of bank deposits, shares and intellectual property rights, the additional income will be taxed by 21.5%, namely the health contributions (5.5%) plus the income tax of 16%.

For example, if a person has savings of RON 10,000 (EUR 2,200) in a bank deposit in Romania for one year, he could get a gross gain of RON 235 (EUR 52) at the best yield in the market (2.35%). This amount will be taxed by 21.5%, so the person will be left with a gain of RON 184.4 (EUR 40.6).

The ones who get revenues from dividends will pay a tax of 10.5%, which includes the 5.5% health contribution and the 5% tax on dividends.

In January 2016, the dividend tax was massively reduced from 16% to 5%. However, the health contribution of 5.5% has been added starting January 1, this year, so the dividend tax will now amount to 10.5%.

However, the new Government may change some of these taxes as early as this month, according to some political sources. Thus, the health contributions for income from bank interest, dividends, and intellectual property may again be removed. However, no official timeline for this has been announced.

Romanians pay fewer taxes starting January 1

editor@romania-insider.com