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    © All Rights Reserved
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    1 views24 pages

    Acca Social Contributios Romanian Taxation 2014

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    georgetacaprarescu
    Acca Social Contributios Romanian Taxation 2014

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    © All Rights Reserved
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    4. Social Security Contributions (Title IX) 41. Overview : ‘The mandatory social contributions are: 4, social security fund (SSF) ~for pension (former regulated by Law 19/2000) 2. health care insurance fund (HCIF) - for medical services and medicines (former regulated 9512006) 3. unemployment fund (UF) - for unemployment ai (former regulated by Law 76/2002) 4, Work accident fund (WAF) ~ for financial aid in case of work accident (former regulated 1346/2002) 5, Health insurance indemnity fund (HIIF) ~for financial support in medical leave (former regul (OUG 15/2008) ‘ 6. Fund for guaranteeing salary payments (FGSP) - for 6 months financial support after ban ‘of employer (former regulated by Law 200/2006) 2. Who pays for the contribution? ‘The social security contributions are to be paid by the insured persons andlor by the employers as shi the following table (art 2963) ‘Contribution | ‘SSF | HCIF | UF | WAF Employers (residents and non-residents) Yes | ves | ves | Yes Employees (residents and non-residents) Yes | Yes Yes Pensioners Yes_ for P>740 Independent income eamers:: Tncome taxed at source (copyright, civ conventions Yes | Yes ‘and accounting technical expertise) Copyright income taxed with actual system Yes Yes Free professions Yes | Yes ‘Giher income from independent activities Yes Yes Other income eamers (rental Investment, other) Yes No income eamers Yes Note: Unless otherwise specified, al references inthis course notes material ae from the Fiscal Code as at 30 September 2012. 164 3. Social contributions for dependent income earners By dependent income eamers we understand: = Employees (also those receiving medical leave allowance or heath care insurance indemnity) residents or non-residents = Elected persons + Administrators/directors with management contract, individual mandatory social contributions (MSC) have to be computed, withhold (fom employees income), fated and submitted to the Social Insurance Budget by the employers monthly by 25" of the following month. employees have to pay the folowing individual mandatory socal contributions (MSC) (art 2968, par (3): Social security fund (SSF) - 10.5% Health care insurance fund (HCIF) - 5.5% Unemployment fund (UF) ~0.5% ral rule for computation base for MSCs: .computation base for the individual MSC of employees represents (art 296) any taxable income as included ‘computation of salary tax, inclusive: ‘The profit share distributed to employees Medical leave allowances (ML) which may be: Ordinary medical leave allowances (OML) paid by employer Ordinary medical leave allowances (OML) paid from National Health Insurance Budget Mesical leave allowances for work accident or professional diseases (hereafter called special mecical leave allowances (SML)) paid by employer Mecical leave allowances for work accident or professional diseases (hereafter called special ‘medical leave allowances (SML)) paid by National Health Insurance Budget Selary income realised by persons with severe disabilities ‘Selary income realised in the IT activity related to software development et financial advantages lke: non-eimbursable loans, cancelation of fables towards the employer, ‘olowing general exceptions (art 296"; please read the FC for the complete list): y tickets (meal, holiday, git or nursery) (art 296 (0)) cothenvise specified, al references inthis course notes material are from the Fiscal Code as at 30, 2012. 165 = The following benefits in kind (art 296 (p) © Hoteling in employer's premises nits deductibility iit (.. thal Individual SSF contribution: ‘The computation base for the individual SSF contribution does not include also (art 296'® a) ~ Special medical leave allowances (for work accident or professional disease) ~ Ordinary medical leave allowances paid from National Health Insurance Budget ~ Ordinary medical leave allowances for what is above 35%*national average gross salary per day of ‘medical leave (paid by employer or from National Health Insurance Budget) = No-competition compensations For the individual social security fund (SSF) contribution the computation base may not exceed 5average national monthly goss salary for each working place (art 296% (6), ‘The average national monthly gross salary as at 30 September 2012 was 2,117 Lei ‘The computation base for the SSF individual contribution for those persons in medical leave represents 35% of the average national monthly gross salary acoording to the number of days of medical leave (Norms to art 2064 (Ap), Individual HCIF contribution: ‘The computation base for the individual HCIF contribution does not include: + Ordinary medical leave allowances Individual UF contribution: ‘The UF contribution computation base does not include ~The amounts received by administrators or by members of Board; ~ The amounts received inthe period of no competion; = OrinaryiSpecal medical leave lowances received from Natonal Healt Insurance Budget. + Terminal compensations Note: Unless otherwise specified, al references inthis course notes material are from the Fiscal Code as at 30 September 2012, 166 Illustration 1 Lets consider Mr Dependent, employed by Company X, which in December 2012, received the following income: ~ Basic salary - 1,000 Lei Christmas git for is 2 minor children - 2°200 = 400 Lei Distribution of 2011 profit share ~ 2,000 Lei Phone calls - total invoice was 800 Lei (VAT included), 50% represents private phone calls Meal tickets ~ 20°9 = 180 Lei ‘Supplementary pension contribution paid by employer in Mr Dependent’s name - 200 Lei (considered benefit in kind because it exceed the ‘employer's deductibility limit) ‘Medical leave paid by employer for 5 days (out of 20), of 500 Lei /et’s compute the tax on salary due for Mr Dependent’s income in December 2012. taxable income: Basic salary 1,000 Lei Christmas git (400 - 2150) 100 Distribution of 2011 profit share 2,000 Phone calls (50%*800) 400 Meal tickets 180 Supplementary pension contribution 200 Medical leave 500 Total taxable income 4,380 Less: {no since gross monthly salary > 3,000) : SSF @10.5%*min{5*2,117; (4,380 - 180 -. max{(500 - 35%*2,117°5/20):0}) (408) ae HOIF @5.5%"(4,380~- 180 -500) at (204) UF @0.5%*(4,380 - 180) (21) eduction for supplementary pension” E e 3,747 16% 800 plementary contribution to the pension fund is not deductible because it isnot considered paid by yee. ‘specified, al references inthis course notes material are from the Fiscal Cade as at 30 167 Mr Bee is employed by Company Hive and has also a secondary job in Company Hom. In March 2012, obtained the following incomes from his employers: Company Hive ‘Company Hi Basio salary 10,000 5 Regular bonus used by Mr Bee to pay his supplementary pension contribution 200 100 Anniversary git Mr Bee has a car from Company Hive (cost 30,000 Lei) which is used 50% for business 60% for his private and he also received a phone from Company Horn. The invoice for phone cells for the month of March wes of Lei (VAT included) and 20% were private phones. In December Mr Bee had basic salary of 9,000 Lei at Hive and of 4,000 Lei at Hom because he claimed 5 medical leave. He received also medical leave allowance of 1,000 Lei from Hive and of 600 lei from Horn received holiday tickets for December of 300 Lei from Hive (according tothe collective labour contract). The it for phone cals in December was 600 Lei (VAT inclusive) and 20% were for personal purposes. There were 20 working days both in March and December. Required: ‘Compute the individual mandatory social contributions as well as the income tax to be withheld from Mr salaries in March and December. Note: The exchange rate to be considered is 4.5 Lel/Euro and the monthly national average salary is 2,117 Lei. Solution: Note: Uniess otherwise specified, all references inthis course notes material are from the Fiscal Code as at 20 September 2012, 168 EXAMPLE SOLUTIONS 51 March December Hive = Hom = Hive = Hom 10,000 5,000 9,000 4,000 200 100 200 100 200 & ) 1.7% * 50%) 255 (800°20%; 600°20%) 160 120 : 1000 _500 incomes(M) 0485 ~ 5460 10,785 4720 e i, |b since monthly gross inoome >3,006Lei - - for second job ea : 2 (0dl~ tickets ~ (ML ~ 35%"2,117°520):5°2197} 10,455; 10,865) ~ (1,098) (10,755 ~ 306 — (1,000 ~ 185); 10,855} (1,012) 5460; 10,855); (673) in{4,720 ~ (500 — 185); 10,855} (463) ick ML) 455; (10,755-300-1,000) (75) (620) 1450; (4,720 ~ 500) 7) (300) (232) J (10,785 - 300) (2) (2) 4,720 a) (24) ry pension (total payments < 400 Euro) (200) : - a5) 4580 ZL 4.001 1365 BO 1467 540, 2 specified, all references in this course notes material are from the Fiscal Code as at 30 185 cial contributions for employers we understand any person (legal person or individual, resident or non-resident) who has employees for the working period as forthe period when their employees are in medical leave. ers have to pay the following mandatory social contributions (MSC) (art 2961, par (3); | security fund (SSF) — between 20.8% and 30.8% (see below) care insurance fund (HCIF) - 5.2% ployment fund (UF) ~ 0.5% ‘accident fund (WAF) — between 0.15% and 0.85% depending on the risk class insurance indemnity fund (HIIF) ~ 0.85% for guaranteeing salary payments (FSP) - 0.25% ution (art 2965 1): tional base for SSF contribution for employers is given by the sum of gross salaries of their ‘adjusted as forthe individual contribution to the SSF. ton base for SSF contribution cannot exceed 5°no of employees “average national monthly gross ‘same level of working condition (in each month]. If this level is exceeded, the new computation hed depending on the weight of the sum of gross salaries in a certain level of working conditions jgF0ss salaries for the employer (Art 296, 1) ‘are differentiated by working conditions (art 296%, (3): for normal working conditions fo dificult working conditions for hard working conditions specie, al references inthis course notes material are from the Fiscal Code as at 30 169 Illustration 2 f Company A has 4 employees with the folowing computation bases for SSF contribution 1 No | Computation base for the individual SSF contribution; Individual | SSF Total =| In normal | In —dffcult | In hard maa ‘working cond. | working cond. | working cong, | @10: 41,000 0 750 ‘The computational base for the employers’ contribution is ‘Min($5,500; 4°5°2,117}= 42,340 Lei ‘And the employer SSF contribution will be: 42,340*(15,500/55,500)*20.8% + 42,340"(11,775/55,500)*25.8% + 42,340"(28,225/55,500)"30.8% = = 2,460 + 2,317 + 6,632 = 11,409 Lei HCIF contribution (art 2965 (2)) For HCIF contribution, the computation base is given by the sum of computational basis of their employees ( taxable incomes except general exceptions as stated above), excluding also: ~ Ordinary mecical leave allowance paid by employer for what is above 5 days of medical leave ‘Special medical leave allowance paid by employer for what is above 3 days (for work accident or professional disease) The ordinary/special medical leave paid from National Heelth Insurance Budget Terminal compensations Note: Unless otherwise specified, al references in this course notes material ae rom the Fiscal Code as at 30 ‘September 2012. 170 HIIF contribution (art 296° (2) The HilF contribution the computation base is given by the sum of computational basis of their employees (any taxable incomes except general exceptions as stated above), excluding also: = Ordinary medical leave allowance paid by emaloyer for what is above 5 days of medical leave - The ordinary medical leave paid from National Health Insurance Budget + Séance allowance = Terminal compensation = No-competition compensation For HIIF contribution, the computation base may not exceed 12°n0 of employees* minimum national gross salary (in each month) (Art 2968, par (2). ‘The minimum national monthly gross salary as at 30 September 2012 was 700 Lei. UF contribution (art 2965 (3)) UF contribution the computation base is given by the sum of computational basis forthe individual UF tribution of their employees (any taxable incomes except general and specific exceptions as stated for ployees). P contribution (art 296 (4)) FGSP contribution is paid by employer forall employees with individual labour agreement. ‘the FGSP contribution, the computation base is given by the sum of computational basis oftheir employees. taxable incomes except general exceptions as stated above), but Terminal compensations Ordinary!Special medical leave allowances paid from National Heath Insurance Budget Profit share contribution (art 296°(4)) |WAF contribution, the computation base is given by the sum of computational basis oftheir employees taxable incomes except general exceptions as stated above), excluding also: ‘Special medical leave allowances (for work accident or professional diseases) ‘Séance allowance No-compatition compensation Unless otherwise specified, al rferences inthis course notes material are from the Fiscal Code as at 30, 2012. 1m Terminal compensation - Amounts received by students in the periods of professional practice In the ordinary medical leave periods the computational base for WAF contribution isthe minimum national salary per day of medical leave 5. Social contributions for pensioners ‘The pensioners include retired persons receiving pensions as well as persons receiving indemnities due to ‘work accident or to a professional disease, ‘The persons earning pensions above 740 Lei have to pay only the following social contributions: ~ Health care insurance fund The computational base for HCIF contrioution for retired person i the pension income above 740 le (at (1). ‘The computational base for HCIF contribution for persons receiving indemnites due to a work accident orto professional disease is the whole value of indemnity (art 2968 (2), The retired persons do not pay UF contribution, not even from their dependent income. (art 296", (4) Illustration 3 If Mr Retired eams 0 grass pension of 741 Lei, he will have to pay HCIF contribution of: 5.5%'Max {741-740; 0 ‘And his net pension income will be 741 — 1 = 740 Lei If Mr Retired eams a gross pension of 783 Lei, then he will have to pay HCIF contribution of 5.5%'Max {783 - 740; 0} = 5.5%"43 = 2 Lei ‘And his net pension income will be 783-2 = 781 Lei Note: Unless otherwise speciid, all references i this course notes material are fom the Fiscal Code as at 30 September 2012. 172 ent and declarations rule 's that the payer of income should withhold the sacial contributions due by the insured persons declaration usually ha idectaration rules are split between the payer of income and the insured person. elected persons, unemployed persons and pensioners, the payer of income has the obligation to contrioution due, submitit and deciar it partners, administrators, managers and freelancers have their own rules for payment and sf social security contibutions.. yer (related to both employer's contributions and employees’ ones): to submit monthly declaration for their part of contributions as well as for their employees’ part imonth following the month to which the contributions relate to. iartng with October 2012, those employers qualifying as “small companies" or as ONG, or as having an average number of employees of maximum 3, will submit their declarations and ‘by 25" of the month following the relevant quarter. ing for exception have to submit their option for quarterly payment and dectaration by 31« yyear and the exception is applicable starting with the month of January current year. have to fill n a separate declaration for each month which will be submitted by 25® of the month ant quarter, nities qualifying for exceptions have employees in medical leave they wil have to submit these ly. ‘of 2012, those persons will submit all 3 declarations for the month of October, November and I25* January 2012. ‘employed by non-residents employers have to declare and pay their individual mandatory social swell as their employer's mandatory social contributions monthly. se specifi, al references inthis course notes material are fom the Fiscal Code as at 30, 173 Illustration 4 Let's consider Mr Copy, a taxpayer earning only copyright income from non-monumental ar, taxed using ‘sum system (ifhe is also employee he has no SSF and HCIF contribution due from copyright income): ‘Assume that in 2012 he realised a taxable income of 120,000 Lel. The minimum national gross mon 700 Lei and S*average gross monthly salary is 5*2,117 = 10,585 Lei. His monthly mandatory social contributions wil be: ~ SSF =31,3% * min((120,000/12-20%"120,000/12); 10,585) = 31,3°8,000 = 2,504 Leiimonth ~ HCIF = 5.5% * (120,000 ~ 20%4"120,000) = 5.5%'8,000 = 440 Leiimonth To be computed and withhold by the income payer by the payment date (ofthe income) and to be d paid by the income payer by 25% of the month following the monthlquarter which these contribut (depending on the reporting period of the income payer). ‘OBSERVATION bis net taxable income becomes: Total taxable income 120,000 Less MSCs (12"(2,504+440)) (35,328) Less allowed deduction of 20%*120,000 (24,000) Net taxable income 60672 Tax @ 16% 9.708 ‘And we know that the income payer withhold from Mr Copy 10% of his total taxable income less anticipated payment, Le. 12"10%"(10,000 - 2,504 - 440) = 12°706 = 8,472 Lei = anticipated tax payment The income payer will dectare the annual realised income of Mr Copy by the end of February 2013. ‘The tax authorities will recomputed the annual tax and contributions related to Mr Copy copyright income of Annual income tax liabilty of 9,708 Le ‘Annual SSF contribution of 31,3%*min(80%"120,000; 12°5*2, 117} = 30,048 Lei = 12°2,504 Lei ‘Annual HCIF contribution of 5.5%*max{80%"120,000; 12°700) = 5,280 = 12°440 Lei ‘The tax authorities will issue the tax dacision assessing the outstanding tax of 9,708 ~ 8,47 Mr Copy will have to submit his annual realised income declaration by 25% May 2013 and will have 60 da the receipt ofthe tax decision to pay the outstanding tax (and to paylclaim any outstandingloverpaid MSCs), Note: Unless otherwise specifed, all references inthis course notes material are from the Fiscal Code as at 20 ‘Sepiemiver 2012 176 5 cer Mr Chil Anticipated, a taxpayer eaming income from civil convention which opt to have withhold at anticipated tax (f this person has also employment income, pension or unemployment indemnity he to pay SSF contribution): iB in 2012 he realised a taxable income of 120,000 Lei. The minimum national gross monthly salary is Staverage gross monthly salary is 52,117 = 10,585 Lei ‘mandatory social contributions will be: = 31.3% * min(120,000/12; 10,685} = 31.3% * 10,000 = 3,130 Levimonth 5% * 120,000 = 850 Lei/month MSC = 12°3,130 + 12°650 = 44,160 Leilyear 120,000 120,009 49,200 that the income payer withhold from Mr Civil 10% of his total rent, je. 12'10%*( 10,000 ~ 3,130 — 650) = 12°368. will recomputed the annual tax and contributions related to Mr Civil income of tax liabilty of 19,200 Lei bution of 31,3%*min( 120,000; 12°52,117} = 37,560 Lel = 123,130 Lei ribution of §.5%"max{120,000; 12700} = 6,600 Lel = 12°550 Lei will ssue the tax decision assessing the outstanding tax of 19,200 - 4,416 = 14,784 Lei 0 dectare his annual realised income by 25% May 2013 and wil have 60 days after the receipt of 10 pay the outstanding tax (orto paylclaim any outstanding/overpaid MSCs). ‘pected, all references in this course notes material are from the Fiscal Code as at 30 7 IMlustration 6 Let's consider Mr Civil Final, a taxpayer eaming only income from civil convention which source the whole income tax of 16% (as final tax) (this person has also employment or pension or une indemnity he will not have to pay SSF contribution): ‘Assume that in 2012 he realised a taxable income of 120,000 Lei. The minimum national gross mont 700 Lei and Staverage gross monthly salary is 5*2,117 = 10,586 Lei His monthly mandatory social contributions wil be: ~ SSF = 31.3% * min(120,000/12; 10,585} = 31.3% * 10,000 = 3,130 Letmonth + HOIF =5.5% * 120,000 = 560 Leifmonth Total MSC = 12°3,130 + 12'650 = 44,160 Leliyear OBSERVATION His net taxable income becomes: Total taxable income 120,000 Net taxable income 120.000 Tax @ 16% 19.200 ‘And we know that te income payer withhold from Mr Civil his total income tax. The income payer wil declare the annual realised income of Mr Civil by the end of February 2013, ‘The tax authorities will recomputed the annual tax and contributions related to Mr Civil income of ‘Annual income tax iabilty of 19,200 Lei (fully pad) Annual SSF contribution of 31,3%*min(120,000; 12°5*2,117} = 97,560 Lei = 123,130 Lei ‘Annual HCIF contribution of §.5%*max{120,000; 12°700} = 6,600 Lei = 12°550 Lei Mr Givil Final will not have to submit his realised income decteration. ‘The MSC are computed, withhold, submitted and declared by the income payer on 2 monthly/quartely b 25% of the fallowing month, Note: Unless otherwise specified, all references inthis course notes material ae from the Fiscal Code as at 20, ‘September 2012. 178 ial contributions for income from free professions, copyright ed using real system and other independent income spersons will have to pay the following individual mandatory social contributions (art 2967"): = Social security fund (SSF) @31.3% (art 296% (1) a) Health care insurance fund (HCIF) @ 5.5% (art 296° (1) b) ‘contribution: computational base = declared income for social security purposes computational base should be in 35%"average national gross salary; 8° average national gross salar] ie. computational base should be in (741; 10,585] ‘outions are nat due by those persons eamning also dependent income or pension or 3 indernnity (art 2962 (2) taxed using the real system, ifin one year: realised income = taxable income * MSC deducted < 35%"average national gross salary => ‘contributions paid will not be reimbursed, but the tax payer will not have to pay SSF contrioutions in year (Norms to art 296221). ifthe tax payer should pay SSF in hishher fist year of activity, the estimated taxable income fered. Ifthe estimated taxable incomeino of months inthe year is below 35%"average national fhe tax payer may nat pay SSF contrbution in his first year of activity (otherwise he will pay SSF his declared income for insurance purposes). ifthe taxpayer should pay SSF in his/her second year of activity, the realised income as ‘should be considered. ifthe realised taxable income/no of months in the year is below srational gross salary the tax payer may not pay SSF contribution in his second year of activity. ‘SSF contribution = 31.3%tdeclared income for insurancelmonth ‘SSF contribution is computed per month but the payment should be done quarterly in 4 equal by 25° ofthe last month of each quarter on on SSF contribution: the final SSF contribution = sum of anticipated payments due have to submit the declaration regarding the insured income in 15 days from the start of activity or each year, tational base = estimated adjusted taxable income* (or anticipated pris)! income norm jutational base = realised taxable income" (forthe final contribution) specified, all references inthis course notes material are from the Fiscal Code as at 30 179 * the adjusted taxable income consider the taxable income without taking into account the deduct expense and the fiscal losses brought forward ‘The computational base may not be below the minimum national gross salary (i this isthe only inco taxpayer) ‘The anticipated HCIF contsibution = 5.5%* estimated adjusted taxable incomelincome norm The anticipated HCIF contribution should be computed per month but the payment should be done in 4 ‘equal instalments due by 25! of the last month of each quarter. The final HCIF contribution is computed by tax authorities considering the taxable income declared in the realised income declaration (to be submitted by 25% May next year) adjusted for the MSC expenses and ‘considering the losses brought forward, ‘Any outstandingloverpad contrbution should be peid claimed (or set off against future lables) by the in 60 days after the receipt ofthe final tax decision. Note: Unless otherwise specified, al references in tis course notes material ae from the Fiscal Code as at 30 ‘September 2012. 180 Illustration 7 Let's consider Mr Reguiar, 2 taxpayer earning only independent income (if he is eaming also employment/pension unemployment indemnity he will be allowed not to pay SSF): ‘Assume that for 2012 his estimated income is 100,000 Lei (adjusted for MSCs purposes), he realised a taxable income of 120,000 Lei and he insured himsetf to the National Pension House for a monthly income of 6,000 Lei (higher than 35%'2,117 = 741 lei and lower than 5°2,117 = 10,585 Lei). Let’s suppose also that in 2012 Mr Regular paid outstanding MSC related to 2011 of 6,000 Lei and that in 2011 the deductible MSCs expense related to 2011 was 10,000 Lei The minimum national gross monthly salary is 700 Lei and S*average gross monthly salary is 5°2,117 = 10,585 Lei He will pay the following mandatory social contributions: Anticipated payments (he should pay SSF contribution because his adjusted estimated monthly income = 100,000/12 > 35%4"2,117): + SSF = 31.3% * 6,000 = 1,876 Lei/month paid in 4 equal quarterly instalments of 1,878 * 3= 5,634 Lei by 25” ofthe last month of each quarter (ie. 25" March, 25 June, 25" September and 25" December) + HCIF = 5.5% * max{100,000/12; 700} = 458,3 Leiimonth paid in 4 quarterly equal instalments of 458°3 = 1,375 Lei by 25® of the last month of each quarter (ie. 25% March, 25" June, 25 September and 258 December) 7 The deductible expense with MSC recorded by Mr Regular in 2012 = the amount paid for 2011 + the anticipated SSF and HCIF contributions of 2012 paid in 2012 = 6,000 + 4°(5,634 + 1,375) = 6,000 + 28,036 = 34,036 Lei By 25" May next year he will have to compute and declare his realised income of 120,000 Lei assessing his final income tax of 163%*120,000 = 19,200 Lei The tax authorities will compute Mr Regular’ outstanding obligations as follows: Outstanding tax iabilty = 19,200 - 16%"(100,000 - 10,000) = 4,800 Lei ~ Final SSF contribution = sum of anticipated payments outstanding SSF contribution o be paid "5,634 = 22,596 Lei (paid in full) => no ~ Final computational base for HCIF contribution = 120,000 + 34,036 = 154,036 Lei => - Final annual HCIF contribution due = 5.5%"max{154,036; 700°12} = 8,472 Lei => - Outstanding HCIF contribution for 2012 = 8,472 - 1,375%4 = 2,972 Lei So, in 60 days aftr the receipt of the Final Tax Decision, Mr Regular will have to pay - Outstanding tax liability of 4,800 Lei = Outstanding HCIF contribution of 2,972 Lei te: Unless othenvise specified, all references inthis course notes material are from the Fiscal Code as at 30 tember 2012. 181 Illustration 8 |EMr Regular, from Iustration 7 is also employee, then: He will pay the following mandatory social contributions: Anticipated payments (no SSF contibution because he has also employment income) ~ HIF = 5.5% * max{100,000/12; 700} = 458,3 LeVmonth paid in 4 quarterly equal instalments 375 Lei by 25% of the last month of each quarter (ie. 25% March, 25% June, 25% September. December) The deductible expense with MSC recorded by Mr Regular in 2012 = { the amount pad for 2011 + the anticipated HCIF contributions of 2012 paid in 2012 = 6,000 + 4*4, +5,500 = 11,500 Lei By 25” May next year he will have to compute end declare his realised income of 120,000 Lei assessing Income tax of 16%"120,000 = 19,200 Lei ‘The tax authorities will compute Mr Regular’s outstanding obligations as follows ~ Outstanding tax liability = 19,200 - 16%6"(100,000 - 10,00 800 Lei = 120,000 + 11,500 = 131,500 Lei => ~ Final computational base for HCIF contributio + Final annual HCIF contribution due = 5.5%'max{131,500; 700"12} = 7,233 Lei => ~ Outstanding HCIF contribution for 2012 = 7,233 — 1,375°4 = 1,733 Lei So, in 60 days after the receipt ofthe Final Tax Decision, Mr Regular wll have to pay: + Outstanding tax lability of 4,800 Lei * Outstanding HIF contribution of 1,733 Lei Solution: Note: Unless othenvise spected, al rferences in tis course notes material are from the Fiscal Code as t 30 ‘September 2012, 182 Lecture example 53 Consider Mr Popescu who eams a gross monthly salary of 2,500 Lei. Mrs Popescu is an actress and her Unique annual taxable income is 30,000 Euro (considered copyright income taxed using lump-sum system) The couple has 3 minor children Reg a) Calculate the net monthly salary of Mr Popescu, considering that his risk working conditions are ‘normal b) Caloulate the also the net annual income of Mrs Popescu, ©} State how Mrs Popescu should settle her income tax and MSC liabilities 4) State how should be paid and declared the mandatory social contributions related to Mrs Popesou's income. (Mrs Popescu is receiving 2,600 Euro (ve. 30,000/12) per month) Exchange rate when Mrs Popescu signed her contract: 1 Euro = 4 Lei, ‘Average exchange rate for the year 1 Euro = 4.5 Lei Minimum national monthly salary = 700 Lei ‘Average national monthly salary = 2,117 Let Solution ; Unless otherwise specified, al references inthis course notes material are from the Fiscal Code as at 30 miber 2012 183 Solution 5.2 2) Total taxable income: Salary Bonus Meal tickets Excessive travel allowance * Present Gross taxable income * the excessive travel allowance should be taxed at Lucy's salary because it is not taxed employer side. * the value of present should be included in salary because itis nt for 8 March or another ‘occasion listed inthe fiscal code (at 55 (4)) Individual mandatory social contributions ‘SSF: 10.5% * min((2,880 - 180); 5°2,117} = 10.5% * 2,700 = 284 Lei HCIF: 5.5% *(2,880 ~ 180) = 149 Lei UF: 0.5%" (2,880- 180] = 14 Lel Total mandatory social contributions of Lucy = 284 + 149 + 14 = 447 Lei Net amount to be cashed Gross salary Less: = PD (250°(1-2,880 — 2,000)2,000)) = Mandatory social contributions (see b)) Tax base Tax @ 16% ‘Net amount cashed by Lucy = 2,880 ~ 180 ~ 200 - 447 - 386 = 1,667 Lei Employer's mandatory social contributions ‘SSF: 20.8% * min{2*5*2,117; [2,700 + (13,000 + 35%6"2,117)} = 20.8% * 16,441 = 3,420 Lei HCIF: 5.2% * (2,700 + 13,000 + 5,000°5/8) = 5.2% * 18,825 = 979 Lei UF: 0.5% * (2,700 + 13,000 + 5,000) = 104 Lei WAF: 0.15% * (2,700 + 13,000 + 5,000) = 31 Lei HIIF: 0.85% * min{2"12*700; (2,700 + 13,000 + 5,000°5/8)} = 143 Lei Note: Unies otherwise specified, al references inthis course notes material are from the Fiscal Code as at 30 September 2012, 186 > 0,25% * (2,700 + 13,000 + 5,000) = 52 Lei e's social contributions = 3,420 + 979 + 104 + 31 + 143 +52 = 4,729 Lei obligations for salary tax ‘0 declarative obligations regarding both her income tax liability and her mandatory social obligations for mandatory social contributions fet has to compute, withhold and submit to the relevant budget as well as to declare to the the tax on Lucy's salary, the individual social contributions of Lucy as well as his part of jons eundation and having less than 3 employees, Principesa Margareta is allowed to submit the regarding the mandatory social contribution on 2 quarterly basis (2s well as for salary it exercise its option for quarterly declaration by 31* January tions for the months January ~ March have fo be submitted by 254 Apri for the months April~ June have to be submitted by 25" July. 5, because one employee was in medical leave in the month of August, the declarations of ‘August wll ave to be submitted by 25 September and the declaration for September has by 25" October. for the months October ~ December have to be submitted by 254 January. fied, al references inthis course notes material are from the Fiscal Code as at 30 187 Solution 5.3 a) Net monthly salary of Mr Popescu Lei Gross monthly salary 2,500 Less: Mandatory social contributions due by Mr Popescu (wt) (414) PD (wa) (140) Tax base 1,946 Tax (16%) at Net monthly income = 2,500- 414-311 ATS b) Net annual income of Mrs Popescu Mrs Popescu is earning Income from selling intellectual property rights (or copyright income) and she the lump-sum deduction system => she is allowed to deduct from her gross income 20% as lum: deductible expense: Lei’ Gross annual income (30,000 * 4.5) 435,000 Less: Lump-sum expense (20% * 135,000) (27,000) Mandatory social contributions due by Mrs Popescu (w3) (99.744) Tax base 98.256 Tax (16%) 1g.92t Net income = 135,000 ~ 99,744 - 10,921 = 84335 ©) Settlement of Mrs Popescu income tax Lei Total tax due by Mrs Popescu 10,921 Less tax withhold at source by her income payer (10% * (135,000 ~ 39,744)) (9.526) Tax due by Mrs Popescu 1395 Note: Uniess otherwise specified, all references inthis course notes material ae fom the Fiscal Cade as at 30 ‘September 2012. 188 Final MSCs due by Mrs Popescu (assessed by tax authorities): ‘Annual SSF contribution of 31,39%*min(80%"135,000; 12°5*2,117} = 33,804 Lel- paid ‘Annual HCIF contribution of 5.5%6*max{80%"135,000; 12700} = 5,940 Lei - paid So Mrs Popescu will have to submit her realised income declaration by 25% May next year and 'n 60 days after the receipt ofthe final tx decision she wil have to pay her outstanding tax lability. ) Payment and dectaration of mandatory social contributions of Mrs Popescu ‘The monthly contributions (of 2.817 + 495 = 3,912 Lel) should be computed, withhold, submit and declared by Mrs Popescu’s income payer for each month by 25 of the next month (or in quarterly Payments of 3,312°4 = 13,248 Lei, by 25® ofthe month following the quarter ifthe income payer has this ‘option) ‘The income payer has to declare the annual realised income of Mrs Popescu as well as the related withhold tax and MSCs by the end of February next year. By 25H May next year, Mrs Popescu will hve to declare her realised income. And in 60 days after the receipt of the final tax decision, Mrs Popescu has to pay any outstanding ‘amount as computed above, Unless otherwise specified all references in this course notes material are from the Fiscal Code as at 30 2012 9. Social contributions for income from other incomes ‘These persons eaming just incomes as: . Rental = Investments Prizes and gambling = Other income ‘And no other income like employment, pension, unemployment indemnity or any form of independentincome treated before, will hve to pay the health care insurance fund (HCIF) contribution (art 296%?) from all the real incomes from the above categories. Computational base: ‘The computational base per month may not be lower than the minimum national gross salary. Computational base = realised taxable income * the taxable income is considered without taking into account the deductible expenses regarding MSC and fiscal losses brought forward ‘The HCIF is computed by the tax authorities based on annual realised income (as from annual income

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