Taxation of Individual Enterprises in 2016

Written by: Bridgewest

Taxation-of-individual-enterprises-in-2016This year’s Fiscal Code has brought several amendments to the taxes an individual enterprise (IE) must pay this year. Our accounting firm in Romania can provide more information about all the changes brought to the Fiscal Code.

The individual enterprise may now hire personnel

The Fiscal Code’s provisions related to individual enterprises was altered because starting this year this type of companies are allowed to hire personnel. The taxes an IE must pay in 2016 are the income tax and the social security contributions to the public pension and health funds. The IE will pay the same contributions for its employees in accordance with their employment agreements.

According to the current legislation, an IE must pay the income tax on the gross income without the deductible expenses. The amount resulted will represent the net income. The income tax will be imposed by applying the 16% quota on the net income. The tax is paid on a trimestral basis calculated based on the income generated in the last financial year, or on an estimated income for newly registered IEs.

Social security contributions for IEs in 2016

Apart from the 16% income tax an individual enterprise must pay, it will also be subject to the social security contribution and social health contribution. The social security contribution applicable to an IE will be paid on the net income starting with 2016, unlike the selected calculation base which was applicable in 2015.

The current Fiscal Code stipulates that an IE can now choose to be subject to the 10.5% individual quota or the 26.3% integral quota. The selected quota cannot be changed during the fiscal year it is being imposed. This contribution must be paid on a trimestral basis by the 25th of the last month of the trimester.

With respect to the health contribution, an IE will be subject to the 5.5% rate with a calculation base depending on whether the imposition will be applied to the net income or to the annual income basis which cannot be lower than the minimum gross salary (1,250 RON) in 2016. The same payment method as to the social security applies.

For complete information about paying taxes and fiscal facilities in Romania, please contact our local accountants.