The Romanian Ministry of Finance has recently passed Order no. 3337/2017 which extends the category of software developers who benefit from income tax exemption (“Order 3337/2017” or the “New Order”).
Order 3337/2017 was published in the Official Gazette of Romania, Part 1, No. 52/18.01.2018. The New Order shall enter into force on February 1st, 2018 and shall start to apply to salary rights corresponding to February 2018.
Main amendments brought by order 3337/2017
According to the Romanian Fiscal Code1, employees who work in software development benefit from income tax exemption. However, this exemption was granted only for employees who worked in software development and were long-term higher education graduates.
The New Order extends the income tax exemption to employees who work in software development and:
- hold a diploma awarded on completion of a short-term higher education;
- hold a baccalaureate diploma and attend the courses of an accredited higher education institution, not necessarily in the IT area (there is no distinction between short and long duration in this case).
The New Order adds on the list of software development activities exempted from income tax the following two:
- program operator assistant: assures technical support in computer programs, according to predefined specifications, and assembles them in coherent systems, including testing to ensure compliance with specifications;
- analyst assistant: assures technical support activities to conduct analysis to define specifications for the effective construction of IT systems that are responsive to user requirements.
In what regards the conditions imposed to the employees in order to benefit from income tax exemption, Order 3337/2017 states that:
- the positions they are employed correspond to the list of the occupations listed in the appendix to the Order;
- the job is part of a specialized computer department, highlighted in the employer’s organization chart;
- hold a diploma awarded after completing a form of long / short-term higher education or hold a diploma awarded after the completion of the first cycle of a bachelor’s degree program issued by an accredited higher education institution or holding a baccalaureate degree and attending the courses of an accredited higher education institution and effectively carries out one of the activities listed in the Annex;
- the employer obtained in the previous fiscal year incomes resulting from the activity of software development and distinctly recorded in the analytical balance those incomes;
- the above annual incomes have to achieve a threshold of at least the equivalent of EUR 10,000 for each employee benefiting from the income tax exemption.
The other conditions set out in the previous Ministry order to be met for employees to benefit from income tax exemption have remained the same.
1 the current Article 60 point 2 of the Fiscal Code