CHANGES IN TAX LAW IN 2017
We resume our column by an article about several changes in tax law, a very dynamic field at the beginning of 2017. Please find below a brief description of the new legal provisions, which refer to the increase of the minimum salary guaranteed at the national level, the elimination of the threshold applicable to the contributions to the pension fund (CAS) and the compulsory health insurance fund (CASS), the modification of the tax on property transfers and the taxation of microenterprises.
INCREASE OF THE MINIMUM SALARY
As of the 1st of January 2017, the minimum basic salary guaranteed at the national level will increase in 2017 from 1,250 Lei/month (approximately 277 Euros) to 1,450 Lei/month (approximately 321 Euros) for a full-time job of 166 hours/month, namely 8,735 Lei/hour, as per Government Decision no. 1/2017, published in Official Journal no. 15 of the 6th of January 2017. Establishing a basic salary inferior to the rate provided by the abovementioned Decision represents a violation of the law and will be punished by a fine between 300 Lei and 2,000 Lei.
ELIMINATION OF THE THRESHOLD APPLICABLE TO COMPULSORY CONTRIBUTIONS TO THE PENSION FUND (CAS) AND TO THE HEALTH INSURANCE FUND (CASS)
Government Ordinance no. 3/2017 eliminates the threshold of 5 times the average gross salary - namely 13,405 Lei (approximately 2.978 Euros) - applicable to the calculation basis of compulsory contributions to the pension fund (CAS) and to the health insurance fund (CASS), due for salary or other types of income assimilated thereto. As a reminder, in 2016, the average gross salary was 2,681 Lei (approximately 595 Euros). This measure will penalize employees whose gross salary exceeds 5 times the abovementioned threshold.
Therefore, for salaries or other types of income assimilated thereto obtained starting from February 2017, taxpayers will have to pay compulsory contributions to the pension fund and to the health insurance fund calculated based on their total gross income.
Exceptionally, the threshold was maintained for revenues obtained from independent activities.
TAX ON PROPERTY RIGHTS TRANSFER
Starting from the 1st of February 2017, transfer of property rights (or any dismemberment thereof) over buildings and their related lands, as well as over lands free of buildings, performed under inter vivos deeds for a price inferior to 450,000 Lei (approximately 100.000 Euros) are exempt from tax. This exemption is provided by Government Ordinance no. 3/2017, amending Law no. 227/2015, published in Official Journal no. 16 of the 6th of January 2017.
For transactions exceeding 450,000 Lei, a 3% tax will be applied to the taxable income. The taxable income represents the difference between the transaction value and the non-taxable amount of 450,000 Lei.
The new legislation eliminates the rates introduced by the former law. For the calculation of the tax, the former law took into account the date of acquisition (more or less than 3 years from the sale) and the transaction value, inferior or superior to 200,000 Lei (3% of the value or 6,000 Lei/4,000 Lei + 2% of the amount exceeding 200,000 Lei).
TAXATION OF MICROENTERPRISES
Government Emergency Ordinance no. 3/2017 also changed the conditions to be fulfilled by a company in order to be considered a microenterprise in terms of taxation, as well as the tax rate.
As of January 2017, the condition regarding the income that a company must obtain in order to be considered a microenterprise was changed. Thus, revenues obtained by the company must not exceed the equivalent in Lei of 500,000 Euros. Previously, the limit had been set at 100,000 Euros.
Furthermore, the 1% tax rate previously applied to microenterprises with at least 2 employees is now also applicable to microenterprises with at least 1 employee. For companies without employees, the 3% tax rate is maintained.
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