Christmas gift vouchers : fiscal conditions in Romania

With Christmas just around the corner, the whole month of December is basically synonymous with gifts and gift-giving. All over the world everybody’s mind is set on how pleasant it will be to make and receive presents on this special occasion. Therefore, as payroll professionnals, we can’t but think about gift vouchers and their fiscal regime at this time of the year. Furtheron we present you the gift vouchers conditions for Romanian employers.

GIFT VOUCHERS 2016 : TAXATION REGIME IN ROMANIA

Many companies in Romania reward their employees periodically for their hard work. But in view of high wage costs, the various available forms of gift vouchers are a preferred alternative. This is even more so customary on a special occasion such as Christmas, one of the most beloved holidays celebrated by Romanians.

In 2016, the Romanian Fiscal Code brought certain amendments to the fiscal regime of presents, gift vouchers and other such allowances. Below we provide an overview of these new regulations, looking at different scenarios and what they imply from a legal point of view.

So, on the occasion of Christmas, employees can receive bonuses, gift vouchers or even presents (considered benefits in kind), under the following fiscal conditions:

FOR AN EMPLOYEE WHO HAS CHILDREN

If a gift voucher of a maximum value of 150 lei (~33) is granted to an employee for himself / herself and for each of his/her children, the tax authorities will treat the vouchers as non-taxable social benefits on the part of the employee. So they will not be taxed at all. If the vouchers exceed this value, the amount going above 150 lei will be taxed as a salary (tax on income plus social contributions).

Moreover, if two spouses are employed by the same company, each of them can receive a gift voucher for themselves and each of them can get it for each of their children as well.

 For the sake of clarity, let’s take the example of Laura and Alexandru Ionescu. They are a married couple with 2 children, working for the same company. In this case Laura can receive 150 lei for her and 300 lei for the children, totally free of tax and contributions. Alexandru can get the same as gift vouchers. Therefore, the Ionescu family will receive 2* 450 lei = 900 lei as a Christmas “bonus”.

FOR AN EMPLOYEE WHO DOESN’T HAVE CHILDREN

As mentioned above, every employee can be granted 150 lei in the form of bonuses, gift voucher or presents on the occasion of Christmas – totally not taxable. What exceeds this value will, again, be taxed as a salary income.

From the global point of view of the company, these expenses are considered social expenses and are deductible to the limit of 5% of profit before tax.

To conclude, employers can grant some amounts of money or equivalent in gift vouchers or presents to each person who is entitled to get it (employee or their minor children), totally free of tax and social contributions. The only condition: respecting the limit of 150 lei/PERSON (not per employee).

Bottom line is: employers, let’s make your employees and their children happy ! And, at the same time, optimize your labour costs!

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