Salary benefits: a strategic tool for optimising human resources

"According to Article 76 of the Fiscal Code, to be considered non-taxable and exempt from social contributions, certain salary benefits must fall within an individual cap, while other incomes must be expressly provided in the Internal Regulations/Collective Labour Agreement. Additionally, there is a special category of non-taxable salary income (such as mobility allowance, the value of food provided by the employer to their employees, medical subscriptions, contributions to a voluntary pension fund, the value of tourist and/or treatment services, etc.), which, in addition to the individual cap, must also fall within a global cap of 33% of the basic salary to maintain their advantageous tax treatment. If a company wishes to offer more benefits from this category, the total amount must not exceed 33% of the employee's basic salary. The employer has the freedom to establish the order in which these benefits are included in the monthly non-taxable cap, but it is important that this order is clearly specified in an internal company document to ensure transparency and compliance with legal provisions.", mentioned Cătălina Călinescu, Partner, HR & Payroll, Forvis Mazars in Romania.

Tax-exempt salary related income is indeed more attractive to employers because it optimises salary costs for companies. These benefits allow companies to offer competitive salary packages without significantly increasing total costs. On the other hand, benefits that are assimilated to salary income and, therefore, subject to a 10% income tax and social security contributions, are less used by companies in salary packages because they increase total costs for employers.

Employers need to find a balance between offering attractive benefits to employees and maintaining salary costs at an optimal level.

In the category of salary benefits exempt from both the 10% income tax and social contributions, we can mention the following:

1. Holiday gifts for employees and their minor children

In cash or in-kind gifts, including gift vouchers offered on holidays such as Christmas, Easter, 1 June (only for employees' minor children), or 8 March (only for female employees), up to RON 300 per beneficiary, for each occasion, are non-taxable incomes, exempt from mandatory social contributions as well. Amounts up to this limit are non-taxable, but any excess is subject to income tax and social contributions. These benefits must be provided in employment contracts or the company's internal regulations and are deductible in calculating corporate income tax, up to 5% of salary expenses.

2. Christmas party

The value of the Christmas parties offered to employees can be considered in-kind gifts, exempt from income tax and social contributions, up to RON 300 per employee if provided in the Collective Labour Agreement, Internal Regulations, or individual employment contract. Any value exceeding this cap is considered salary income and is subject to income tax (10%) and mandatory social contributions. However, if there is no specific provision in the company's internal policies, the safe fiscal approach is to consider the value of the Christmas party as salary income, subject to income tax and mandatory social contributions.

3. Benefits for special family events

Amounts offered by the company for certain occasions provided by the Fiscal Code, such as the birth of a child, assistance for serious and incurable diseases, or death, are non-taxable salary incomes if provided in the Collective Labour Agreement, Internal Regulations, or individual employment contract. The conditions for granting, as well as the value of these aids for special events, must be established in the collective or individual employment contract or internal regulations, and supporting documents must be attached to the employee's request for granting.

4. Wellbeing vouchers

For the value of tourist or treatment services, including transportation, offered to employees and their family members during vacation, the annual non-taxable limit is set at the value of the average gross salary used to substantiate the state social insurance budget for the year in which they were granted (in 2024, the average gross salary is RON 7,567). This benefit is non-taxable from the perspective of mandatory social contributions and income tax if provided in the employment contract or internal regulations, within the previously mentioned limit. Supporting documents must demonstrate the use of the amount for the declared purposes during the vacation period.

Many companies also offer subscriptions for sports activities, facilitating employees' access to gyms. Some companies even have gyms at their location, providing an additional advantage to employees, making it easier for them to access physical activities and support their physical and mental health. This benefit, within the limit of €100 per year/employee, is exempt from income tax and social contributions. These initiatives are an important part of wellbeing strategies, contributing to increased employee satisfaction and performance.

5. Contribution to a voluntary pension fund

Employers' contributions to a voluntary pension fund are considered employee benefits and are exempt from income tax and social contributions, within an annual cap of €400/employee (RON 1,990 per year). Amounts exceeding this cap are taxed and subject to mandatory social contributions. Contributions to voluntary pension funds represent an important advantage for both employers, who benefit from tax facilities under certain conditions and caps, and employees, who can secure an additional pension for the future.

6. Rewarding employees with shares

Employers can use Stock Option Plan programmes to offer employees the right to purchase company shares, either for free or at a preferential price. "These salary benefits are exempt from 10% income tax and social contributions, subject to certain conditions imposed by the legislation, the main condition is that at least one year must pass between the granting of the right and its exercise. If this period is not respected, the advantages become taxable incomes and are subject to salary taxes. If employees later decide to sell the shares, the incomes obtained are considered capital gains and are taxed at 10%. If the income from the sale of shares exceeds certain caps, the health insurance contribution of 10% may also be added.", mentioned Anca Lamba, Senior Manager, HR & Payroll, Forvis Mazars in Romania.

7. International certifications for professional training

Employers can offer employees international certifications for professional training, covering the costs associated with courses, exams, and study materials. These benefits are considered exempt from tax and social contributions as long as they are offered in the company's interest and contribute to the employee's professional development. These expenses can also be deducted in calculating the company's corporate tax.

Another category of salary benefits that, when granted under legal conditions, are subject only to a 10% income tax or a 10% income tax and a 10% health insurance contribution, are certain value vouchers.

• Meal vouchers

Meal vouchers are salary benefits granted to employees to cover daily food costs. These are subject to a 10% income tax and a 10% health insurance contribution, according to the legislation in force. Meal vouchers are mainly used for purchasing food products and can be used in various locations, such as supermarkets and restaurants.

• Cultural vouchers

Cultural vouchers can be offered to employees for purchasing cultural goods and services, such as tickets to shows, movies, museums, or books. The maximum value is RON 220 per month or RON 440 for occasional events, and this benefit is exempt from social contributions but subject to a 10% income tax. Cultural vouchers encourage employees to participate in cultural activities, contributing to personal development and improving the quality of life.

• Holiday vouchers

Holiday vouchers are salary benefits intended to cover travel and accommodation expenses during vacations. These are subject to favourable tax treatment within the annual limit of six minimum gross basic salaries per country (for 2024: a maximum of RON 22,200/year = 6 x RON 3,700), being usable only for domestic tourism. Granted under the conditions and cap provided by special legislation, these are subject only to a 10% income tax and a 10% health insurance contribution, being exempt from other social contributions. If granted, the employee can no longer benefit from the reimbursement of other tourist expenses in the same fiscal year. Holiday vouchers allow employees to plan and spend their vacations more affordably, contributing to their relaxation and recovery.

These benefits are granted in accordance with fiscal legislation and offer significant advantages for both employees and employers, contributing to increased employee satisfaction and motivation.

Other benefits that a company can offer, although from a fiscal point of view are assimilated to salary incomes, being subject to a 10% income tax and mandatory social contributions:

• Annual performance bonuses

Performance bonuses are a frequently used practice to reward employees who significantly contribute to achieving company objectives. These are considered salary incomes and are subject to income tax (10%) and mandatory social contributions (social insurance contribution 25%, health insurance contribution 10%, labour insurance contribution 2.25%). Although not exempt from salary taxes, performance bonuses are an effective way to motivate employees and support their retention.

• Additional paid leave days

Employers can offer additional paid leave days, especially on holidays or special events. Although from a fiscal perspective, the amounts are assimilated to salary incomes, these leave days contribute to employee wellbeing and long-term productivity.

• Non-financial and family-friendly policies

Many companies implement policies that promote work-life balance. These include flexible working hours, teleworking, support for childcare, as well as access to mental health and coaching programmes.

In conclusion, offering salary benefits with preferential tax treatment to employees represents not only an opportunity to increase their satisfaction and loyalty but also an effective way to attract and retain valuable talents. These benefits, when used strategically, can improve not only the organisational culture but also the overall performance of the company. By investing in employee wellbeing, companies contribute to creating a healthy, balanced, and productive work environment, which, in the long run, can lead to market consolidation and sustainable growth.

-ENDS-

Contact(s)

Emilia Popa, Head of Marketing, Communication, and Business Development, Forvis Mazars in CEE & in Romania
Emilia.Popa@mazars.ro  / +40 741 111 042

Mădălina Lazăr, PR & Corporate Communication Manager, Forvis Mazars in Romania

Madalina.Lazar@mazars.ro  / +40 763 385 622

About Forvis Mazars

Forvis Mazars is a leading global professional services network. The network operates under a single brand worldwide, with just two members: Forvis Mazars LLP in the United States and Forvis Mazars Group SC, an internationally integrated partnership operating in over 100 countries and territories. Both member firms share a commitment to providing an unmatched client experience, delivering audit & assurance, tax and advisory services around the world. Together, our strategic vision strives to move our clients, people, industry and communities forward.  

Forvis Mazars is the brand name for the Forvis Mazars Global network (Forvis Mazars Global Limited) and its two independent members: Forvis Mazars LLP in the United States and Forvis Mazars Group SC. Forvis Mazars Global Limited is a UK private company limited by guarantee and does not provide any services to clients.

Visit forvismazars.com to learn more.

About Forvis Mazars in Romania

In Romania, Forvis Mazars has 29 years of experience in audit, tax, financial advisory, outsourcing, consulting, and sustainability. We empower over 370 people to deliver our promise to clients with confidence.

Visit forvismazars.com/ro to learn more.