Last updated: 28 June 2019
Tax regulations concerning the activity of companies in the construction sector, in force since January 1st 2019, were subject to further amendments and clarifications by the Government Emergency Ordinance no. 43/2019, published in the Official Journal no. 507 from June 21st 2019.
The amendments were justified by the practical problems faced by the companies targeted by Emergency Ordinance no. 114/2018, especially as regards the turnover calculation and market distortions.
Thus, the new normative act try to clarify, on the one hand, the calculation method of the turnover of companies in the construction sector and, on the other hand, widens the list of activities concerned by the special tax-related and salary measures in the construction sector.
The new provisions of Emergency Ordinance no. 43/2019 will enter into force 30 days after its publication in the Official Journal, namely on July 21th 2019.
THE AMENDMENTS
The guaranteed national minimum gross monthly salary of employees of the companies acting in the construction sector, and whose scope of activity include one of the NACE codes expressly provided in the GEO, will be at least RON 3,000 per month (not including allowances, bonuses and other), during the period between January 1st 2020 – December 31st 2028, for a monthly average of 167.333 working hours, meaning an average of RON 17,928 per working hour. For the record, according to the Emergency Ordinance no. 114/2018 such companies were bound to pay a minimum gross monthly salary of RON 3,000 only until December 31st .
The list of NACE codes concerning constructions and other assimilated companies targeted by the specific measures in the construction sector has been supplemented by 3 new codes, namely:
- 2351 – Manufacture of cement
- 2352 – Manufacture of lime and plaster
- 2399 - Manufacture of other non-metallic mineral products (non-classified in the previous classes) (bitumen, pitch, etc.)
The new codes were added to the NACE codes previously mentioned in the Emergency Ordinance no. 114/2018, namely:
- The construction activity as defined by NACE code 41.42.43
- 2312 – Shaping and processing of flat glass
- 2331 – Manufacture of flat glass
- 2332 – Manufacture of bricks, tiles and other construction products, in baked clay
- 2361 – Manufacture of concrete products for construction purposes
- 2362 – Manufacture of plaster products for construction purposes
- 2363 - Manufacture of concrete
- 2364 – Manufacture of mortar
- 2369 – Manufacture of other articles of concrete, cement and plaster
- 2370 – Cutting, processing and polishing of rocks
- 2223 - Manufacture of builders' ware of plastic
- 1623 - Manufacture of other builders' carpentry and joinery
- 2512 - Manufacture of doors and windows of metal
- 2511 – Manufacture of structural metal products and parts of structures
- 0811 - Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate
- 0812 – Quarrying of gravel and sand, mining of clays and kaolin
- 711 – Architectural, engineering and technical consulting services and related technical consultancy
For the record, between January 1st 2020 and December 31st 2028, the employees of the companies whose scope includes one of the above mentioned CAEN codes are exempted from the payment of the income tax (10%), the CASS (Health Insurance) charge (10%) and can also benefit from a reduction of the CAS (pension) charge rate from 25% to 21,25%. The aforementioned individuals subject to the payment of the contribution for the private pension fund, according to law 411/2004, are exempted from the payment of this 3,75% contribution, within the limits of the above mentioned rate.
Employers benefit from a reduction of 2,35% to 0,3375% of the work insurance charge.
- The conditions to be met by employers acting in the building domain have also been modified.
Thus, in order to benefit from the above-mentioned tax regulations, companies must prove that:
a. The turnover generated by the activities under the above-mentioned CAEN codes accounts for 80% of the total turnover.
b. With respect to companies already incorporated on January 1st, the total turnover to be taken into account is the turnover of the previous financial year; if the turnover accounts for at least 80% of the total turnover, employers shall benefit from the tax facility the whole year.
c. With respect to companies registered with the Trade Register after the 1st of January of the current year, the turnover to be taken into account is the turnover recorded since registration date, the turnover of the month the tax facility is applied included.
d. With respect to companies already existing as on January 1st, but whose turnover recorded from the above-mentioned activities does not account for at least 80% of the total turnover for the previous fiscal year, the turnover to be taken into account is the turnover recorded since the beginning of the year, the turnover recorded the month the tax facility is applied included.
Note: When calculating the turnover, incomes resulting from a contract or an order, as well as from works, materials, tools, transport, equipment and other ancillary activities are to be taken into account. The non-invoiced production is also taken into account.
The actual mechanism for turnover calculation will be subsequently established by the order of the Commission for Strategy and Prognosis, and it will be published on the institution’s site.
a. The gross monthly incomes coming from salaries and assimilated wages provided for by the Tax Code (art. 76 (1) – (3)) obtained by natural persons benefiting from such exemption shall be calculated at the level of a monthly gross salary amounting to at least RON 3.000, for a labor agreement of 8 hours per day. The exemption shall be applied to the amount of the gross monthly income within the limits of RON 30.000, obtained by natural persons from salaries and assimilated wages as provided for by the Tax Code (art. 76 paragraphs (1) – (3)). The fraction exceeding the amount of RON 30.000 shall not be subject to tax incentives.
The implementation standards of tax incentives shall be approved by a joint order of the Ministry for Finance and the Ministry for Labor.