Maintaining the net income for tax exempt persons for which the net income has been diminished as a result of the transfer of social contributions from employer to employee

Government Emergency Ordinance no. 3/2018 on certain fiscal-budgetary measures was published in the Official Gazette no. 125/08.02.2018.

The Ordinance applies to individuals who earn salary income, based on individual work contracts in progress on 31 December 2017, and which fall into the categories of persons exempt from income tax (programmers, researchers, people with disabilities, seasonal workers) whose monthly gross salary is increased by at least 20% compared to December 2017.

For above mentioned persons, employers establish, withhold and pay the social health insurance contribution, according to the following calculation formula:  

CASS withhold = Gross income 2018 – CAS due in 2018 – Net wage December 2017

 

Calculation example:

 

Gross income December 2017:                                  10,000 lei

Compulsory social contributions – employee:              1,650 lei

CAS (10.5%)                                                                   1,050 lei

CASS (5.5%)                                                                      550 lei

Unemployment (0.5%)                                                       50 lei

Net income 2017                                                          8.350 lei

 

Gross income 2018:                                                    12,000 lei

[10,000 lei + 10,000 lei x 20% (gross income 2017 increased by 20%)]

Compulsory social contributions due by the employee: 4,200 lei, of which:

CAS due (25%)                                                                   3,000 lei

CASS due (10%)                                                                 1,200 lei

CASS retained:                                                                     650 lei

(gross income 2018 -CAS 2018 – net income December 2017: 12,000 lei – 3,000 lei – 8,350 lei = 650 lei)

CASS difference deducted from the state budget:               550 lei

[(CASS due – CASS retained): 1,200 lei – 650 lei]

Net income 2018                                                               8,350 lei

 

The value of the positive difference between CASS due to CASS withhold is set by the employer and is distinctly presented as the amount deducted in the Declaration 112.

The ordinance also establishes the allocation method of the CASS difference from the state budget, as well as the method of information transmission to CNAS.

If the social insurance contribution calculated according to the Ordinance is lower than the social insurance contribution set at the minimum national salary level, the difference is paid by the employer / income payer on behalf of the employee / income beneficiary.

The Ordinance applies to salary income made during 2018.

For salaries made during 2018, before the date of entry into force of this Emergency Ordinance, the employer / income payer may make the adjustment by submitting a corrective Return 112 by 31 December 2018.

The Ordinance is applied starting with January 2018 declaratory obligations.