Social security contributions down 2%

As they found out from the Official Gazette, employers will pay smaller social security contributions as of next month, after the law stipulating a two percent reduction in labour force taxation came into effect on January 1st.

Considering the Fiscal Code stuck to the formula adopted in July 2005, this is the most important modification of taxation levels in 2006.

“In line with the stipulations of the Law on the social security budget, starting January 1st contributions will decrease by two percentage points, a cut only applied in the case of employers. Thus, 1.5% less will be paid towards pensions and 0.5% less for unemployment benefit contributions,” Mihai Seitan, a secretary of state with the Labour Ministry, told ZIARUL FINANCIAR.

Until now, companies used to pay social security contributions totalling 32.5% of the gross salary of an employee, of which 22% went to pensions, 7% to the health fund, 3% to unemployment contributions and 0.5% to the labour accidents fund.

Starting February, when January salaries are paid out, total contributions will go down to 30.5%.

As regards employees, the contributions they pay will remain unchanged from last year, namely 9.5% for pensions, 1% for unemployment and 6.5% for health, totalling 17%.

The authorities” decision with regard to employers will result in an about 217 million-euro reduction in revenues in comparison to those scheduled for the state social security budget, one reason why the reduction was delayed by one year in 2005.

The government”s intention to slash contributions for employers was mentioned in September by the finance minister Sebastian Vladescu shortly after he took over this position, but he did not indicate the contribution categories considered.