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Deloitte: the elimination of supertaxation of part-time contracts, a coming back to normality

The elimination of the ovetaxation of the contracts with reduced worktime (part-time) to come into use starting with 1 January 2020 represents a coming back to normality after more than two years when, successively they were affected by fiscal measures which we could evaluate as disproportionate, sent on Friday the consultancy and audit company  Deloitte.

The first measure of this kind was adopted in the summer of 2017, when the legislature decided the taxation of income of this kind of contracts at least at the level of the minimum salary at the level of economy, producing effects such as the retention of a sum from contributions higher than the net sum to collect.

‘ The fiscal revolution’ ( the transfer of contributions from the employer to the employee and the increase of the minimum salary)aggravated the situation and placed the pressure on the employers, they being called to regulate such absurd situations by covering the difference. The law which led to the annulment of the overtaxation of the part-time contracts was passed by the parliament and after promulgation by the president of Romania and publishing in the Official Gazette, it should start its coming into force in January 2020, 1st, said Raluca Bontas, Partner Global Employer Services, Deloitte Romania.

Practically, the new law annuls the articles in the Fiscal Code which include that, out of the income obtained on the basis of a part-time contract,health contribution and social insurance one must be kept at the level of the minimum salary at the level of the economy if the sum obtained on the basis of the contract with reduced norm is lower. Under these conditions,  this will go back to the previous form, the taxation of contributions to the gross income obtained by the employee and not a superior income, according to Deloitte.

 ‘The business environment reacted unanimously, stating the fact that it starts from the presumption of guilt in the case of all those with this kind of contract, instead of letting the control authorities to identify the employers who break the law and to regulate punctually such situations.At the beginning of 2018 there were numerous cases where the employees could not cover the social contributions from their income’ Bontas said.

For example, at the level of the minimum salary at the level of the economy of 1,900 lei, valid in 2018, the sum due to health and pension gets to 665 lei,  irrespective of the duration of the worktime (two, four or six) and was completely under the competence of the employee. For a gross salary for two hours – 475 lei, the employee had to bring from home the difference and to work in the meantime.