CHANGES IN TAX LAW IN 2019 First of all, GRUIA DUFAUT LAW OFFICE wishes an EXCELLENT NEW YEAR to all Petit Journal readers!

2019 starts with several important changes in tax law, such as the increase of basic minimum gross salary, the implementation of the tax on financial assets for banks, the increase of cash contributions due by the electricity operators and for the electronic communications sector. New modifications are made concerning the regime of private pensions plan or the reverse taxation in VAT area.

Most of these legal modifications are detailed in the Government Emergency Ordinance no. 114 of 28th of December 2018, published on the Official Journal no. 1116 on 29th of December 2018.

THE INCREASE OF GROSS MINIMUM WAGE

As of January 1st, 2019, the minimum gross salary at the national level in 2019 increased from 1,900 Lei per month (approximately 413 Euros) , for a full-time job of 166.666 hours per month to.

- 2,080 Lei per month (approximately 452 Euros) for a full-time job, namely 12.43 Lei/hour
And
- 2,350 Lei per month (approximately 510 Euros), namely 14.044 Lei/hour for a full-time job for employees hired for positions requiring higher education, having a seniority of at least one year in the field.

In order to introduce the differential basic minimum gross salary, the Labor Code has just been amended by introducing the concept of “differential basic minimum gross salary”, which allows distinguishing the employees by their work position (requiring or not higher education) and seniority criteria.

Meanwhile, the legislator implemented the minimum gross salary of 3.000 lei per month for employees working in the construction sector.

ADDITIONAL TAXES

Assuming the need to protect the population who contracted bank credits by the increase of ROBOR rates at 3 months and 6 months, the Government introduced the tax on financial assets, due by the banks. In consequence, these banks must pay the tax on financial assets, if the ROBOR quarterly average is higher than 2%. The ROBOR quarterly average is established based on ROBOR rates at 3 months and 6 months, published by the National Bank of Romania for the last quarter / semester prior to the quarter of calculation.

Meanwhile, companies who have electrical energy and natural gas licenses will have to pay a cash contribution of 2% applied to the turnover.

Moreover, the telecommunication operators willing to obtain 3G 4G and 5G licenses through competitive or comparative selection procedures, will have to pay a tax of 2 to 4% of the turnover, depending of the type of radio frequency band. The extension of the validity period of the license is subject to the payment of a license fee of 4% of the turnover of the year proceding the license extension, multiplied by the number of years for which the license is granted.

Finally, the Ordinance increases the imposition by 10% of cultural tickets, besides meal tickets, holiday vouchers, nursery tickets or present tickets (which were already taxed), which are assimilated to salary income. Notice: these tickets are not submitted to social contributions.

PILLAR II PRIVATE RETIREMENT PENSIONS REFORM

According to the newest modifications of the law on privately administered pension funds, a person participating in a pension fund (known as the “Pillar II”) may opt, following a minimum 5 year term of participation in the fund, to transfer the funds to the public pension system. Funds held on the transfer date shell remain in the participant’s personal account until the right to the private pension is obtained. Thus, the contribution to the Pillar II is mandatory for a period of 5 years; at the end of this period, the person participation in a pension fund has to opt to continue to pay his contribution of 3,75% in the private pension system or to transfer his contribution to the public pension system (The “Pillar I”).

AMENDMENTS REGARDING THE VAT

Reverse charge measures for gain delivery, transfer or greenhouse gas emission certificates, electricity delivery, green certificates transfer, mobile phone delivery, integrated circuit devices, gaming consoles, tablets and laptops have been extended until 30 June 2022.

This measure puts the national legislation in conformity with EU legislation, namely the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.