Romania’s ruling coalition agrees on several changes to the tax code, including higher taxes on gambling winnings

The three parties that make up Romania’s ruling coalition – the Social Democrats (PSD), the Liberals (PNL) and the Hungarians (UDMR) – have agreed on several changes to the tax code that will be implemented from January 1, 2023. However, there is no consensus. again about the so-called ‘solidarity tax’ on companies with a turnover of more than 100 million euros.

Among the changes agreed by the three ruling parties are a 40% tax rate on gambling winnings, higher taxation for self-employed professionals and sole proprietorships (PFAs) and a lower threshold for SMEs who benefit from the taxation of income rather than profits. taxation, according to sources within the ruling coalition cited by Europe Liberates.

Excise duty on cigarettes will also increase from July 1, 2022.

From January 2023, the tax rate on gambling or lottery winnings will increase to 40%. Currently, the tax rate on these gains is 1% up to 66,750 RON (13,500 EUR), 16% up to 445,000 RON (89,900 EUR) and 25% beyond this threshold. The proposal to increase this tax came from the liberals, who argued that many Romanian households are negatively affected by gambling activities.

The coalition parties also agreed to lower the turnover threshold for micro-enterprises from €1 million to €500,000. This means that only companies with a turnover of less than 500,000 euros will continue to pay income tax (1% for those who also have employees and 3% for those who do not have employees). Companies whose turnover is above this threshold pay a tax on profits (rate of 16%). The coalition also plans to limit the activities to which micro-enterprise status applies and to remove management or brokerage from the list of CAEN codes that micro-enterprises can have.

Other changes relate to the taxation of sole proprietorships (PFA) and liberal professions, the objective being to increase the taxes collected on these categories of income by applying different tax thresholds.

However, the ruling parties have still not reached a consensus on the “solidarity tax” that would apply to the turnover of large companies. The measure is promoted by the Social Democrats but opposed by the Liberals. Other matters that remain in limbo are the taxation of so-called special pensions, i.e. pensions not linked to contributions, which apply to specific professions such as the military, law enforcement, magistrates and former legislators, and the overtaxation of high salaries in the public sector.

The Social Democratic Party (PSD) also presented some of its tax reform proposals on 16th June. These proposals aim for differentiated taxation of individual incomes according to their level (progressive taxation). According to PSD, salaries below RON 4,500 should have progressive deductions and income tax for the minimum salary should be 0%.

At the same time, the PSD is proposing an additional tax of 40% for public sector salaries above the president’s salary. Special pensions should also be taxed additionally, according to PSD (with a tax rate of 40% for amounts over RON 9,000 per month and 90% for amounts over RON 18,000 per month).

As for the “solidarity tax”, the Social Democrats propose that companies with an annual turnover of more than 100 million euros pay a contribution of 0.5% of their sales to support the public health system and of education. This contribution would be temporary for a period of two years, depending on

(Photo source: Inquam Photos / Octav Ganea)

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