Legal alert 7 – Latest amendments to the Tax Code regarding the quantum of the social security contributions

Normative act: Government Emergency Ordinance no. 82/2017 (“GEO 82/2017”) amending and supplementing several normative acts.

  • Subject: The employers must collectively negotiate the implementation of the latest amendments to the Fiscal Code regarding the quantum of the social security contributions owed by the employees until 20 December 2017.
  • Amendments: GEO 82/2017 amends certain provisions of the Law 62/2011 on social dialogue for the purpose of implementing the provisions of the Government Emergency Ordinance no. 79/2017 for the amendment of completion of the Law no. 227/2017 regarding the Fiscal Code (“GEO 79/2017”). OUG 79/2017 brings significant amendments to the fiscal obligations established on behalf of the employees having an individual employment contract, including the increase of the social security contribution to 25% of the gross income.

The main amendments brought to Law 62/2011 on social dialogue (“Law 62/2011”) are as follows:

  • All employers which do not have a collective bargaining agreement applicable at company level have the obligation to initiate collective negotiations in order to implement the amendments brought by GEO 79/2017 to the Fiscal Code regarding the quantum of the social security contributions owed by the employees.
  • All employers already having a collective bargaining agreement in place, have the obligation to negotiate an addendum to the collective bargaining agreement in order to apply the provision of GEO 79/2017.

Regarding the parties entitled to negotiate, GEO 82/2017 provides derogations from the rules on employees’ representation established by Law 62/2011, as follows:

1. If the trade union established at company level does not have representation powers and is not affiliated to a federation of trade unions having representation powers at the business sector level of activity, employees may be represented during negotiations by:

  • the employees’ representatives and
  • the representatives of the trade union federation, if empowered in this respect by the trade union established at company level.

2. If there is no trade union established at company level, employees may be represented    during negotiations by the employees’ representatives who may also invite to participate in the negotiations one of the following:

  • a representative of the federation of trade unions, having representation powers at the business sector level of activity, or
  • a representative of a trade union confederation, having representation powers at a national level.

 

Pension Index

Starting 1 July 2018 the value of the pension index will be increased by 10%, in comparison with the current value, and will be of RON 1,100.

Social allowance for pensioners  

Between 1 July 2018 and 31 December 2018 the value of the social allowance for pensioners will be of RON 640. Currently, the level of the pension allowance is of RON 520.

Contribution to private pension funds

Starting 1 January 2018 the contribution rate to private pension funds will be reduced from 5,1% to 3,75%. The contribution to private pension funds is part of the social security contribution due to the public pension system.

Child care allowance

Starting with the rights related to January 2018, the minimum value of the monthly child care allowance is changed, being equal to the sum resulted after multiplying the social reference index by 2,5. The social reference index is established by the Law no. 76/2002 regarding the unemployment insurance system and the stimulation of employment. Currently, the minimum value of the monthly child care allowance represents 85% of the minimum national gross salary.

The amount of the allowance will be increased with the sum resulted by multiplying the social reference index by 2,5 in case of two or more situations that could determine this right, for each of the children, starting with the second child, including the cases of twins, triplets or multiplets pregnancy.

The amendments shall apply for a limited period of time, namely between 20 November 2017 and 20 December 2017.

Source: Romanian Official Gazette no. 902/16 November 2017

Authors:

Nicoleta Gheorghe, Lawyer

Inga Tigai – Tax Senior Manager



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