American Chamber of Commerce in Romania

The New Fiscal Code sets forth important amendments concerning the applicability of social security charges applicable to agreements concluded with freelancers, the most important of which aims at the applicability of the full quota to revenues which are not subject to withholding taxes.

"Applying a full quota of 31.3% for social security charges, approximately 20% more than in the previous wording, will have a significant impact on the cash flow of beneficiaries and services providers. From this perspective, we anticipate an increase in advisory work related to tax optimization and to legal approach on agreements concluded with freelancers", stated Ionuþ Bohâlþeanu, Partner with Muºat & Asociaþi – Tax Advisory, during the "TaxEU – Taxation in Romania, present and future" conference, organised by Evensys, in partnership with major consulting and law firms. The event brought together officials from the Ministry of Finance and the National Agency for Fiscal Administration, along with reputed experts in taxation law.

In parallel, for revenues subject to withholding tax obtained by freelancers, copyrights and other IP rights, the individual quota of 10.5% for social security charges is maintained. The tax regime applicable starting with July 1, 2012 provides that health insurance security charges are not due for income obtained from intellectual property rights, if the origin of the income is benefits from unemployment, pension of less than RON 740, freelancing or associations without legal personality, etc.

On the other hand, income generated by activities performed based on civil agreements, but also by intellectual property rights, can be taxed differently, in line with the legal provisions of the agreement concluded between the beneficiary and the services providers. Thus, one may choose to apply either a prepayment of 10% to the gross income, minus the social security charges, in which case the individual is required to submit the D200 annual revenue statement until May 25 of the year following the one in which the revenues were obtained, or a 16% gross income tax, plus health insurance tax - 10.5% and unemployment tax - 0.5%. In this case, the social security charges and taxes are calculated on the gross income and the individual is not required to submit the D200 annual revenue statement.

"Regarding the beneficiaries of income generated by copyrights and other IP rights, as well as income of freelancers obtained under civil agreements, social insurance and health insurance security charges shall be computed, withheld and paid to the State budget during the fiscal year by income beneficiaries and are final obligations”, said Ionuþ Bohâlþeanu during his presentation “Taxation and withheld taxes applicable to agreements concluded with freelancers".

Ionuþ Bohâlþeanu has been with Muºat & Asociaþii since 2004. He has built an impressive practice in taxation matters while also being acknowledged for his skills in capital markets and mergers & acquisitions areas. With tax as his main area of practice, Ionuþ is both an attorney at law and a certified tax adviser. His dual qualification has enabled him to provide complex legal advice on taxation projects spanning transaction structuring for fiscal optimization, tax effects of state aid, income tax, VAT, direct and indirect taxation, import duties and taxes, etc. At the same time, his knowledge and expertise allow him to have a unique multifaceted understanding of complex transaction structures and mechanisms.

During his career, he assured legal and fiscal advice for important national and international companies in complex taxation projects including transaction structuring for fiscal optimization, tax effects of state aid, income tax, VAT, import duties and taxes for major clients including Monsanto, SAB Miller, Enel SpA and Delhaize. Furthermore, Ionuþ has an extensive expertise in energy and capital markets, assisting clients in major transactions, such as the EUR 820,000,000 successful acquisition of Electrica Muntenia Sud by Enel or the Rompetrol Group NV acquisition of the remaining free float of Rompetrol Rafinare and Rompetrol Well Services, so far the most successful mandatory public offer ever conducted on the local capital market.