Romania’s Senate approved a draft law project to reduce the social security contribution (CAS) by 5 percentage points. However, the Chamber of Deputies will have the final say on this project.

According to the bill adopted by the Senate, the social security contribution paid by the employers on behalf of their employees should be cut by 2 percentage points, and the employees contribution would be cut by 3 points.

The social security contribution (CAS) for normal work conditions in Romania is currently 26.3% of the gross salary. The employer pays a CAS rate of 15.8% while the employee pays 10.5%. If the new cut will be approved, the new rates would be 13.8% for the employer and 7.5% for the employee.

The Government and the Senate’s Budget Committee have issued negative opinions on this law draft as the new tax cut would further increase the balances in the social security budget. The social security contributions paid by companies and employers in Romania currently don’t cover the whole costs with state pensions. Moreover, almost half of the 10.5% contribution paid by employees goes to private pension funds.

Romania previously cut the CAS rate by 5 percentage points in October 2014.

editor@romania-insider.com