Global Compliance Desk – Romania

Emergency Ordinance (“DVO 114”) was issued by the Romanian Government December 29, 2018, having massive implications for key economic sectors. DVO 114 introduces a compulsory and substantial increase in the minimum wage and also affords significant tax breaks for certain businesses involved in defined areas of economic activity, such as the construction industry.

New Minimum Salary

In November 2018 the government introduced the possibility of providing a differentiated minimum wage depending on education and age. The general minimum wage has been increased by a government decision which went into effect on January 1, 2019. Two aspects of the minimum wage are particularly important:

  • It applies to all companies active in the building industry as defined in the tax code. It also affects architecture, engineering and technical consulting companies (CAEN code 711).
  • According to the wording of the DVO 114, it applies to all employees of these companies, regardless of the position occupied.

Accordingly, companies in the above fields of activity are likely to pay not only construction workers but all their employees, regardless of their function (i.e. cleaners, contractors, etc.) at least RON 3,000.

Tax Break Relief

For the above-mentioned companies and their employees, the following tax exemptions and reductions were introduced between the period of January 01, 2019 and December 31, 2028:

  • Income tax exemption
  • Health insurance exemption
  • Reduction of the pension insurance contribution from 25% to 21.25%
  • Reduction of the labor insurance contribution from 2.25% to 0.3375%.

However, these facilities only apply if the company meets the following criteria are met cumulatively:

  • Active in one of DVO 114’s defined business areas.
  • Sales from these activities amount to at least 80% of total sales since the beginning of the year, including the month in which the relief becomes applicable.
  • Relevant salaries range between 3,000 and 30,000 RON.
Sajid Mir
ABOUT THE AUTHOR
Sajid Mir
A labor and employment lawyer at Replicon who specializes in global compliance. Replicon provides award-winning products that make it easy to manage your workforce. Replicon is an industry leader in global compliance and has a dedicated team which pro-actively monitors international labor regulations for ensuring proper adherence with specific country rule requirements.
Get started today.
Set up a free trial based on your business needs. Start Free Trial

Polaris Creates a New Category of Professional Services Automation

Introduces The World’s First Self-driving PSA, Delivering More Results with Less Hassle. Redwood City, CA – October 28, 2020.  – The Polaris PSA solution launched today, creating a new category…Read More

News from week beginning 19th October

By Steve Brooks - October 26, 2020 What a week, with both Workday and Sage Intacct holding conventions. Several PSA vendors announced new releases including a major update from FinancialForce.…Read More

Replicon Announces Time Intelligence Platform for Cloud-based Solutions from SAP for the Professional Services Industry

Replicon Time Tracking for Service Organizations Delivers a Single Source of Truth for Time. Replicon announced today that its Time Tracking for Service Organizations application is available for purchase on…Read More

Demystifying the millennial workforce: 5 tips from Trunk Club’s Andrew Anderson Devine

Time magazine labels the millennial generation the “most threatening and exciting generation,” infamous for “narcissism [and] its effect: entitlement.” In the workplace, the perception of the millennial workforce is no…Read More

Common pitfalls in professional services organizations & how to avoid them (1/3)

The professional services organization (PSO) landscape is changing -- employees are harder to recruit and retain, a globalized marketplace increases competition for clients, clients want more for less, and management…Read More

Exempt vs non-exempt workers: simplify employee classification

In the United States, most jobs are governed by the Fair Labor Standards Act (FLSA), which classifies workers into two broad categories: exempt and non-exempt. Under the FLSA, non-exempt employees are…Read More
  • Polaris
  • Cloud
  • In The News
  • Corporate
  • Professional Services Management
  • Project and Program Management
  • Shared Services Management
  • Time and Attendance Management
  • Workforce Management
  • Customer Feature
  • Feature Update
  • Time Intelligence
  • Industry News
  • Webinar Recap
  • Global Compliance Updates