Benefits in Kind and Cash Benefits: Understanding Their Tax Treatment in Romania

Employers in Romania have access to a broad menu of additional benefits they can offer employees, both in the form of non-monetary perks and monetary rewards. These benefits play a meaningful role in employee satisfaction and motivation, and a number of them come with favorable tax treatment that makes them an attractive part of a compensation package.

Meal vouchers or meal allowances

One of the most common perks in Romania's employment landscape, meal vouchers are typically provided to cover meal expenses during working hours. These vouchers are subject to a 10 percent income tax, deducted directly from the employee's salary. Under recent regulatory changes, the maximum value of a meal voucher rose to 35 lei per worked day from August 1, 2023, with a further rise to 40 lei per worked day from January 1, 2024. Employers may also choose to provide vouchers below this maximum.

Holiday vouchers or vacation benefits

Employees can receive holiday vouchers, or the equivalent value of holiday services including transportation during leave. These are subject to income tax, but are not included in the base for calculating social security contributions.

Accommodation or rent compensation

Employers who provide housing or rent compensation benefit from a tax-free allowance of up to 20 percent of the minimum gross national base salary per month per person, which stood at 600 lei for 2023. Specific conditions apply, including that the employee and their spouse must not own property in the locality where they work.

Employer contributions to voluntary pension funds

Employers can make tax-free contributions to voluntary pension funds on employees' behalf, up to a maximum of 400 euros per person per year, helping employees save for retirement with a tax advantage.

Life, health, and liability insurance

Employers offering life, health, or liability insurance can do so within an annual limit equivalent to 6,789 lei in 2023, the average gross salary figure used for state social security budget calculations.

Gym memberships

Gym or fitness center memberships are tax exempt up to a maximum of 400 euros per person each year, supporting employee wellbeing while offering a tax advantage.

Telemarketing allowance

Employees whose individual employment contracts include telemarketing clauses may be eligible for a tax-free allowance covering utility expenses tied to their remote work location, within limits specified in the employment contract or internal regulations, up to 400 lei per month.

Professional training courses

Training courses can be tax-exempt as long as they are directly relevant to the employee's field of work, benefiting both employee development and overall workforce skill.

Transportation reimbursements

Compensation for commuting expenses is a common, tax-free way for employers to ease the financial burden of daily travel.

Relocation expenses

When employees are required to relocate to a different city or country, employers may cover related costs, including transportation, housing, and other associated expenses, tax-free, at the employer's discretion.

Airline tickets

Foreign citizens relocating to Romania are eligible to have airline tickets reimbursed by employers, whether for their initial relocation or for visits to family in their home country throughout the year.

Library and online subscriptions

Employers increasingly offer tax-free access to digital resources such as e-books, academic journals, and educational videos, supporting employees' professional development.

Summary of tax treatment

• Meal vouchers: subject to a 10 percent income tax
• Holiday vouchers: subject to income tax, but excluded from social security contribution calculations
• Accommodation or rent compensation: tax-free up to 20 percent of the minimum gross national base salary per month per person, with conditions
• Employer contributions to voluntary pension funds: tax-free up to 400 euros annually per employee
• Insurance premiums: tax-free within an annual limit of 6,789 lei for 2023
• Gym memberships: tax exempt up to 400 euros per person annually
• Telemarketing allowance: tax-free within contractual limits, up to 400 lei per month
• Professional training courses: tax-free if related to the employee's field of work
• Transportation reimbursements: tax-free
• Relocation expenses: tax-free
• Airline tickets: tax-free for foreign citizens relocating to Romania
• Library and online subscriptions: tax-free

Understanding the tax treatment of these benefits is essential for employers looking to build competitive, cost-effective compensation packages, and for employees seeking to make the most of what their employer offers. In a competitive job market, these benefits can make a meaningful difference in attracting and retaining talent.

Sources: Romanian Fiscal Code, Romanian Ministry of Finance