Official Gazette 638/10 September – O.U.G. no. 82/2010 dated September 8-th 2010 for the modification of art. 7 par. (1) pt. 2 sub-pt. 2.1 of Law no. 571/2003 regarding the Fiscal code, as well as for the modification of art. III of O.U.G. no. 58/2010 for the modification and supplementation of Law no. 571/2003 regarding the Fiscal code and other fiscal and financial measures.

The new O.U.G. redefines the notion of professional income which results from social insurance contributions, by this meaning only the copyright income and related rights and income resulting from professional activities carried out on the basis of contracts concluded according to the civil code.

Practically, only for these income categories the social insurance contributions are mandatory, the Authorised Physical Persons (“PFA”-s) observing the old regulations previous to OUG 58/2010.

Thus, starting from September 11-th 2010 the Authorised Physical Persons shall pay the pension contributions only if they do not have also the quality of employee, and these contributions shall be determined based on the insurance contract signed with the National House of Pensions and they may optionally pay the unemployment contributions.

Caution though, for the income cashed in the period between 1 July and 10 September 2010 the Authorised Physical Persons must declare and pay contributions for pension and unemployment according to the provisions of OUG 58/2010.

According to the new OUG, the obligation to declare, calculate, retain and pay individual social insurance and unemployment contributions corresponding to the copyright income and civil conventions shall be the obligation of the income payer.

Caution, this provision shall apply for the income paid starting from September 11-th 2010.

The persons insured in other systems, which are not integrated in the public pension and other social insurance right system, and the retired, do not owe any social insurance or unemployment contributions. The systems which are not integrated in the public pension system are: the military, the attorneys and non-integrated religious cults. In order to benefit from the exemption, these persons have the obligation to prove to the income payer that they belong to the category of people who are exempt from the payment of contributions.

The income payers have the obligation to submit monthly, until the 25^th of the month following that in which the professional income was paid, a statement regarding the nominal database of the persons who have professional income, other than the salary related one. These statements shall be submitted to the territorial pension houses, more specifically to the county employment agencies, as well as to the Bucharest agency, in the area where the income payer is subscribed to.

The individual social insurance and unemployment insurance contributions shall be transferred into separate accounts set for this purpose by the National House of Pensions and Other Social Insurance Rights and by the National Employment Agency.

As regards the copyright income, the social insurance contributions shall be due as follows:

· persons who have professional income on a regular basis, regardless of whether this income is obtained exclusively or additionally to other employment income, owe individual social insurance contributions, their monthly calculation basis being 5 mean gross salaries;
· persons who on occasional basis have income exclusively from copyright activities owe individual contributions, the annual calculation basis of these being 5 mean gross salaries;
· persons who occasionally, apart from employment income, also have copyright income do not owe individual contributions for the professional income;

By occasional income we understand the income resulted from performing sporadic activities, without a regular characteristic.

Unlike copyright income, for payments done based on civil conventions there are no supplementary specifications regarding the calculation and withholding of contributions, which means that for this income the social insurance contributions are due regardless of whether this income is occasional or not.

The monthly calculation basis for individual social insurance and unemployment insurance contributions is:

the gross income decreased by the flat rate expenses for copyright income and related rights;
the gross income, for income resulted from the activity carried out based on contracts/conventions concluded as per the Civil code.

As the withholding of contributions is done by the income payer, the extra amounts retained as a result of exceeding the monthly or annual limit of 5 mean salaries shall be returned or compensated, at the request of the insured, submitted with the territorial houses of pension, more specifically with employment agencies.

Another important modification implemented by the new OUG refers to the relaxation of the conditions under which any activity may be reconsidered as a dependant activity.

According to the new provisions any activity which meets at least one of the following conditions may be considered as dependant:

the income beneficiary is in a subordination relationship with the income payer, more specifically the administration bodies of the income payer, and meets the labour conditions imposed by the latter, such as: attributions due on them and the modality of fulfilling them, the place where the activity is performed, working schedule;
when performing the activity, the income beneficiary uses exclusively the material basis of the income payer, which are adequately equipped spaces, special activity or protection equipment, working tools or others similar and contributes in physical activity or intellectual capacity, not in personal capital;
the income payer bears, in the interest of carrying out the activity, the travel expenses of the beneficiary of the income, such as the delegation-representation allowance in the country and abroad and other similar expenses;
the income payer bears the vacation allowance and the allowance for temporary labour incapacity, in the account of the income beneficiary.

By the new O.U.G. the condition “any other elements which reflect the dependant nature of the activity” was eliminated, condition which could be interpreted discretionary by the control bodies.

The activities performed independently, in the terms of the law, which generate income form liberal professions, such as copyright and related rights, with subsequent modifications and additions, still cannot be reconsidered as dependant activities, whereas for all other income paid to individuals there is at any given moment the possibility to reclassify the payments should these meet at least one of the conditions mentioned above.

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