Significant amendments to the Romanian Tax Code are imminent regarding changes in income tax rates for certain categories of individuals and clarifications as to the method of taxation for various types of benefits, as well as modifications of social security compliance rules for board members and the taxation rules for stock options granted by limited liability companies. It is expected that the law will be published in the official journal of Romania this month, and its provisions applicable as of January 2021.
Significant amendments to the Romanian Tax Code are expected to come into force as of January 2021, regarding both changes in income tax rates for certain categories of individuals and clarifications as to the method of taxation for various types of benefits. These amendments will have an impact on personnel seconded to Romania, as well as on the Romanian entities paying out benefits to their employees/assignees seconded to Romania.
The measures to be adopted should be taken into consideration by Romanian entities granting benefits to their employees/ assignees as they will affect the amounts subject to tax at the individuals’ level. Also, the method of taxation that applies to the benefits granted under certain secondment structures is clarified; therefore companies should review their policies regarding benefits payments in order to make sure they are compliant with the new provisions.
The law containing the amendments to the Romanian Tax Code has been under discussion for a while and is now in final form, awaiting promulgation.1 It is expected that the law will be published in the official journal (Monitorul Oficial) of Romania this month, and its provisions applicable as of January 2021.
This law foresees a large number of changes and clarifications; we will focus on some of the key ones for individuals – including those on international assignment – and their employers.
The changes under this law have been made based on input from tax consultants and civil society and represent long-awaited clarifications. Individuals and employers should be aware of these changes and consult with their tax advisers to determine what gaps exist and what changes need to be made, so that they can adapt their policies and practices, communicate clearly and timely to all stakeholders regarding the changes, and foster proper compliance.
1 Proiect de Lege nr. 478/2019 pentru modificarea și completarea Legii nr. 227/2015 privind Codul Fiscal – forma pentru promulgare.
The information contained in this newsletter was submitted by the KPMG International member firm in Romania.
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