Although it is supposed to be the easiest to understand and apply tax system, because it addresses to small businesses, the fiscal regime for the microenterprises has become more complicated this year because of conditioning the tax rates on the number of employees but also of the amendments to the tax base.
The effective advantages, in terms of savings due to a lower tax rate, for example of 1%, are minor, because the reduced tax rate on the company income is compensated by higher taxes paid for two full time employees.
If we take into account the increase of the minimum wage since May, we observe that the company has to pay taxes of 1,226 lei, monthly, for two employees, with 212 lei more than in January-April 2016.
If a company plans to hire one or two employees strictly in order to obtain a reduced rate of taxation, it has to notice that the total taxes related to the employees summed up with the tax on the income of micro enterprises does not represent a more advantageous taxation compared to the rate of taxation applied to the companies without employees.
On the other hand, we must point out the fact that changing the number of employees means, automatically, in addition to switching to a different tax rate, more bureaucracy (tax returns, changes in Revisal etc). So personnel fluctuations may affect the business and it is fairly common.
What are the tax rates?
• 1% – at least two employees or startups with an employee
• 2% – with one employee
• 3% – without employees.
The tax rates apply – depending on the evolution of the number of employees – in the quarter in which the change is made.
For enterprises that have one or two employees, whose employment relationship ends, the condition relating to employees is considered fulfilled if during the same quarter new employees are employed. To maintain or change tax rates, new employees must have individual labor contracts of indefinite duration or determined at least 12 months.
The employee is the person employed with full time by individual labor contract, according to Law no. 53/2003 – Labor Code. However, the condition is considered fulfilled in the case of micro-enterprises which:
As an exception, the 1% rate applies in the first 24 months from the registration date for the micro-enterprises:
The 1% rate is maintained within 24 months if the company is not in one of these situations in the first 48 months from registration date:
• voluntary liquidation by the decision of the General Assembly, according to the law;
• dissolution without liquidation, according to the law;
• temporary inactivity, according to the law;
• declaration that the activities are not taking place at the registered office / headquarters;
• capital increase due to the contributions of new shareholders / partners;
• shareholders / associates sell / assigns / change the units held.
The condition regarding the employee must be fulfilled in the first 60 days from the registration date of legal entities.
What are the conditions for micro?
• have incomes from other sources than banking, insurance and reinsurance, capital market, gambling activities or activities of exploration, development and exploitation of oil and gas deposits;
• incomes from other sources than consulting and management, in a proportion of at least 80% of total revenue;
• incomes do not exceed the RON equivalent of EUR 100,000;
• share capital is held by other persons than the state and local authorities;
• it is not in liquidation, registered in the Trade Register or the courts.
What is the tax basis?
It consists of income from any source, minus:
Add to the tax base:
The acquisition value of cash registers shall be deducted from the taxable base, according to documentary evidence, in the quarter in which they were put into operation.
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