The new Romanian Fiscal Code came into force on the 1st of January 2016, bringing of course some notable regulatory changes. One of them refers to the tax treatment of gift vouchers – those small valuable papers also known as gift certificates or gift cards.
THE GRANTING OF GIFT VOUCHERS
A company operating in Romanian company can grant gift vouchers in different situations. The most common use of these certificates is as additional remuneration means for employees. This usually occurs on special occasions, such as:
- important religious holidays: Christmas, Easter or other similar celebrations
- International Children’s Day – 1st of June
- International Women’s Day – 8th of March (in Romania also celebrated as Mother’s Day)
The amount offered to each employee adds up to 150 lei (around 33 €). This figure has not been changed for years now and it stays the same in 2016 as well. No income tax or social contributions are due for this amount corresponding to the value of gift vouchers.
Another common practice within the Romanian business environment is for companies to offer these certificates for promotion actions or as gifts to their clients.
GIFT VOUCHERS IN 2016: CHANGES IN TAX REGULATION
As we are interested in the impact of Romanian fiscal regulations on payroll management, we will therefore analyze only the situation when gift vouchers are offered to employees. The other situation, when companies offer them to other stakeholders have implications in profit taxation.
This being clear, we are happy to notice that the new Fiscal Code brings positive changes, at the benefit of employees. Up until this year, gift vouchers were subject to a 16% income tax. On the other hand gifts in nature offered on those same occasions were not added to the salary, not considered benefits and were deductible from the profit (if not exceeding the limit for social expenses) for the employer. They were therefore more profitable than the gift vouchers for the employee in terms of taxation.
With the new Fiscal Code, the law eliminated this discrepancy starting the 1st of January 2016, thus having a positive impact. Starting this year, gift vouchers are no longer subject to taxation, both at the benefit of employees, as well as that of their underage children.
Any amount above 150 lei/occasion/employee will of course be considered as a bonus, taxed with 16% plus social contributions.