At the end of last year and the beginning of this year, two new laws were introduced that bring changes to the Fiscal Code and the Labor Code regarding the taxation of amounts considered as income and the corresponding mandatory social contributions, as well as the situations in which employers can suspend employees’ individual employment contracts on their own initiative.

1. Fiscal Updates – regulated by Law no. 296/2020 for amending and supplementing Law no. 227/2015 regarding the Fiscal Code, effective from January 1, 2021

The following amounts are not taxable for income tax purposes:

– Amounts granted to employees working remotely to support utility expenses at their place of work, such as electricity, heating, water, and data subscriptions, as well as the purchase of furniture and office equipment, within the limits set by the employer through the employment contract or internal regulations, up to a monthly limit of 400 lei corresponding to the number of days the individual works remotely. These amounts will be granted without the need to present supporting documents.

– Coverage of costs for epidemiological testing and/or vaccination of employees to prevent the spread of diseases that pose a risk to employee health and public health.

The following amounts are not included in the calculation base for social contributions:

– The amounts mentioned above, as well as those paid by the employer for the early education of employees’ children.

2. Labor Code Updates – regulated by Law no. 298/2020 for supplementing Law no. 53/2003 – Labor Code, effective from December 27, 2020

The new law adds to the list of situations in the Labor Code (Article 52) where employers can suspend employees’ individual employment contracts on their own initiative, by including suspension due to the declaration of a state of emergency or siege in Romania.

Additionally, the new Article 531 details that the unemployment insurance budget will subsidize technical unemployment benefits for employers who are forced to suspend or temporarily reduce their activity during the state of emergency or siege.

Technical unemployment benefits will be subsidized based on applications submitted by employers via email to the territorial employment agencies. Subsidized benefits will be 75% of the base salary, but no more than 75% of the gross average salary in force during the year in which the state of emergency or siege is declared.

Technical unemployment benefits will be taxed and withheld at source by the employer. For these benefits, the employer is not liable for the work insurance contribution.

Employers will receive the gross amounts of the requested benefits within 15 days of applying for the subsidy. The net amounts must be paid to the employees within a maximum of three working days, and the taxes must be declared and paid to the state by the 25th of the month following the receipt of the gross amounts.

Employers are prohibited from eliminating the jobs of those placed on technical unemployment, a prohibition applicable after the completion of the subsidy. The prohibition will be valid for a period equal to the time during which technical unemployment for those positions was subsidized.

Violation of the prohibition will require the employer to repay the subsidies received for the abolished position(s).

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