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The personal deduction is a fiscal benefit that is given to the employees in Romania with individual labor contract, regardless of its nature (full-time / part time, fixed term / permanent) solely at the employer where the employee declares its basic function, for revenues less than 3.001 lei.
The amount and the formula of the personal deduction were changed by the new Fiscal Code, namely through a law recently published in the Official Gazette, the MFP Order no. 52/2016.
The article 77 of the Tax Code 2016 provides that the persons who obtain incomes from salaries are entitled to the personal deduction as an amount granted for each month of the reporting period, at the place where the basic function is.
The personal deduction is granted depending on the monthly gross income from salaries, and is determined by reference to the employee’s number of dependents. Compared to 2015, the personal deduction amount increased on all levels of income:
i) for gross salaries up to 1,500 lei, the personal deduction is:
ii) for gross salary between 1,501 and 3,000 lei, the personal deduction is regressive and is calculated by a specific formula, as in the Order no. 52/2016;
iii) for employees with gross salary incomes largest than 3,001 lei, there is no given deduction.
For employees with gross salary income of between 1,501 lei and 3,000 lei including, the personal deduction is calculated regressive following formulas:
VBL = gross monthly income rounded at the level of 1 Romanian leu, without subdivisions, by rounded to lion for the fractions of over 50 Romanian bani inclusively and by neglecting the fractions to 50 Romanian bani.
The personal deductions is not split according to the number of hours in the case of revenues under part-time contract, at the basic function.
The dependent can be, according to the Fiscal Code, the wife / husband, the children or other family members, relatives of the employee or of his / her spouse until the second degree, whose incomes, taxable and non-taxable, do not exceed 300 lei per month. For the minor dependent, the personal deduction is granted to each of the parents or of the guardian.
To establish the personal deduction to which is entitled, the taxpayer shall submit to the income payer an affidavit, which must include the following information, according to HG 1/2016 – Norms for the application of the Fiscal Code:
For the children dependents who are not minors, the taxpayer who has incomes from wages will attached to this statement also the certificate from the salary payer of the other spouse or the affidavit of him/her as he/she does not benefit of personal deduction for that child.
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