A company intends to grant an external per diem (France), under Law 72/2022, to a seconded employee for a period of 3 months. The employee has a basic salary of 3000 lei. What is the tax treatment and how are these amounts calculated?
According to article 71 of the Government Decision 518/1995, the period for which the daily allowance in foreign currency is granted is determined according to the means of transport used, taking into account:
- the moment of take-off of the aircraft, on departure abroad, and the moment of landing of the aircraft, on arrival in the country, from and at the airports which are crossing points of the Romanian state border;
- the moment of crossing by train or by car through the crossing points of the Romanian state border, both on departure abroad and on return to the country.
For the fractions of time not exceeding 24 hours, the daily allowance is granted as follows: 50% up to 12 hours and 100% for the period exceeding 12 hours.
First, the company must determine the non-taxable daily allowance and multiply the result by the duration of the journey.
According to article 76 paragraph (4) letter h) of the Fiscal Code, in force from May 2022, the delegation allowance, the secondment allowance, including the specific allowance for transnational secondment, the additional benefits received by employees under the mobility clause are not taxable income, as well as any other sums of the same nature, other than those granted to cover transport and accommodation expenses, received by employees in accordance with the relevant legislation, during the period of activity in another locality, in the country or abroad, in the interest of the service, for the part exceeding the non-taxable limit thus established:
(i)in the country, 2.5 times the legal level established for the allowance, by Government decision, for the staff of public authorities and institutions, up to 3 basic salaries corresponding to the job occupied;
(ii) abroad, 2.5 times the legal level established for daily allowance, by Government decision, for Romanian personnel sent abroad for temporary missions, up to 3 basic salaries corresponding to the place of work occupied.
The limit of 3 basic salaries corresponding to the job occupied is calculated by comparing the 3 salaries to the number of working days in the respective month, and the result is multiplied by the number of days of the period of delegation/detachment/performance of the activity in another locality, in the country or abroad.
It follows that, if the amount representing the limit of 3 basic salaries corresponding to the job occupied in relation to the number of working days in the month:
– is greater than the amount representing 2.5 times the level established for public institutions, the non-taxable allowance is equal to the amount representing 2.5 times the level established for public institutions;
– is less than the amount representing the level of 2.5 times the level established for public institutions, the non-taxable daily allowance is equal to the amount representing 3 basic salaries corresponding to the job held in relation to the number of working days in the month.
Therefore, starting with the income for May, the daily non-taxable allowance is established by making two calculations:
2.5 x the daily allowance established for public institutions;
- the gross basic salary provided for in the individual employment contract x 3 : the number of working days in the month in which the trip takes place.
Afterwards, the two results are compared and the lower amount is awarded (as a non-taxable amount).
According to the Annex to Government Decision 518/1995, the daily subsistence allowance for public institutions when travelling to France is 35 Euro.
35 x 2,5 = 87,5 Euro
Taking into account a Euro exchange rate of 5 lei, 87,5 Euro x 5 lei = 437,5 lei.
3000 lei x 3 = 9000 lei
Month of May – 9.000 lei : 22 (22 represents the number of working days in May) = 409,09 lei.
Thus, the non-taxable daily allowance in May for travel to France for an employee with a basic salary of 3,000 lei = 409.09 lei/calendar day of secondment as this amount is the lower of the two limits.
– Fiscal Code (approved by Law no. 227/2015, published in the Official Gazette no. 688 of 10.09.2015), with subsequent amendments and completions;
– Fiscal Procedure Code (approved by Law no. 207/2015, published in the Official Gazette no. 547 of 23.07.2015), with subsequent amendments and completions;
– Methodological Norms for the application of the Fiscal Code (approved by Government Decision no. 1/2016).