How Gifts and Bonuses are Taxed for Companies in Romania

Written by: Bridgewest

How-Gifts-and-Bonuses-are-Taxed-for-Companies-in-Romania.jpgCompanies in Romania have the possibility of preparing and implementing varied promotional campaigns through which they can identify new sale methods and advertising ideas. Such campaigns are usually subject to rewards or prizes which are considered taxable incomes. For a better understanding of how such revenues must be categorized from a taxation point of view, our accountants in Romania can guide you towards the method in order to avoid any misunderstandings.

The legislation regarding the taxation of bonuses in a Romanian company

The Article 108 of the Romanian Fiscal Code mentions that gifts and bonuses received in a contest or as part of a campaign are considered incomes and must be taxed in accordance. There are three main categories which regard the incomes gained in certain situations, such as:
•    incomes in form of awards offered for participants in science and arts events, festivals or national and international contests;
•    particular incomes in form of money or other gifts for sportspersons who won national and international competitions;
•    taxable revenues obtained from a lottery. 
In addition to the categories mentioned above, and in accordance with Article 114 of the Fiscal Code, there are also other revenues obtained from other sources, subject to taxation but which cannot enter in any classification. At the annual financial report, all gifts and bonuses offered to employees in a company are also considered, but for comprehensive support in this matter, you may address your concerns to our Romanian accountants. The same team can also offer information related to the audits necessary for small, medium or large companies in Romania.

Taxation of incomes from prizes

From a fiscal point of view, the prizes offered in a company are part of another category of taxable incomes which are levied with 16% applied on gross income. There are cases where the financial authorities consider the gifts as part of the protocol expenses which are normally subject to a deductible limit of 2%. The interesting part is that such prizes are not subject to VAT, as mentioned by the Article 270 of the Romanian Fiscal Code, but only if they won’t exceed the amount of 100 RON.
The taxation of gifts and bonuses in a company will depend on how they are categorized, in complete agreement with the legislation. In this matter, we suggest you contact our accounting firm in Romania and solicit comprehensive information about the taxation system in the country.