In the Official Gazette of Romania (Part I) no. 507 dated June 21, 2019, Government Emergency Ordinance no. 43/2019 was published, amending and supplementing certain normative acts concerning the establishment of measures in the field of investments.
Among other things, this ordinance also introduces changes in the area of the minimum wage and tax incentives for construction sector employees, as well as an expansion of the eligible activity domains.
In addition, several areas regulated by GEO no. 114/2018 are reformulated and clarified, such as financing programs for rural development projects, programs for the development of spa resorts, and public-private partnership procedures.
Application of tax incentives in the construction sector:
A very important aspect is that GEO no. 43 maintains the guaranteed gross minimum wage for employees in the construction sector at 3,000 lei per month for the period January 1, 2020 – December 31, 2028.
This salary is for a standard working schedule of 167.33 hours per month and will be applied exclusively in the sectors regulated by this ordinance.
If an employer does not comply with this minimum wage level, they will be subject to an administrative fine and the tax incentives will be cancelled.
As a new element, it has been expressly stated that for differences in tax obligations arising from the recalculation of social contributions and income tax, late interest and penalties are owed in accordance with the Fiscal Procedure Code.
A first measure introduced by the analyzed ordinance consists of an expansion of the construction activities falling within the scope of the tax incentives.
Therefore, the updated list of domains for which the incentives provided in GEO 114/2018 apply includes:
- Construction activities defined under CAEN code 41.42.43 – Section F – Construction;
- Domains of production of construction materials, defined by the following CAEN codes:
2312 – Processing and shaping of flat glass; 2331 – Manufacture of ceramic tiles and flags; 2332 – Manufacture of bricks, tiles and construction products, in baked clay; 2361 – Manufacture of concrete products for construction purposes; 2362 – Manufacture of plaster products for construction purposes; 2363 – Manufacture of ready-mixed concrete; 2364 – Manufacture of mortars; 2369 – Manufacture of other articles of concrete, plaster and cement; 2370 – Cutting, shaping and finishing of stone; 2223 – Manufacture of builders’ ware of plastic; 1623 – Manufacture of other builders’ carpentry and joinery; 2512 – Manufacture of doors and windows of metal; 2511 – Manufacture of metal structures and parts of structures; 0811 – Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate; 0812 – Operation of gravel and sand pits; 2351 – Manufacture of cement; (new) 2352 – Manufacture of lime and plaster; (new) 2399 – Manufacture of other non-metallic mineral products n.e.c. (new)
- Architectural, engineering and technical consultancy activities.
Important! Tax incentives are granted if employers achieve 80% of their turnover from construction activities, in total turnover.
GEO no. 43/2019 clarifies the conditions relating to the turnover that must be met to benefit from incentives, depending on the date of incorporation of the company and depending on whether construction and assembly activities were carried out in the previous year.