How do we calculate the expense allowances in 2022?

Starting with May 1, 2022 new rules on expense allowances are introduced in Romania, respectively the maximum level of deductible allowance is changed and a new extreme limit is introduced for amounts that are non-taxable and not subject to social contributions, applicable both to external and internal expense allowances.

Thus, the daily allowance calculation will be differentiated according to the period for which it is calculated, as follows:

Period from 1 January 2022 to 30 April 2022

• for internal daily allowance: the maximum deductible amount is 50 lei/day;

• for external daily allowance: the maximum deductible amount is 2.5 times the level for public institutions. The maximum deductible external allowance shall be fixed for each country.

As of May 1, 2022

As of May 1, 2022, new rules, introduced by Law 72 of 31.03.2022, apply. The law enters into force on 3 April 2022 and provides that the new daily allowance regulations apply from the month following commissioning, i.e. from May 2022.

A new extreme limit is introduced for amounts that are non-taxable and not subject to social contributions, in the two situations – a limit of 3 basic salaries corresponding to the job occupied – for employees and for administrators – 3 remunerations stipulated in the legal report. It applies to both external and internal allowances.

” 1. In Article 76 paragraph (2), the letters k) and m) shall be amended and shall read as follows:

,,(k) the delegation allowance, the detachment allowance, including the specific allowance for transnational detachment, the additional benefits received by employees under the mobility clause, as well as any other amounts of the same nature, other than those granted to cover transport and accommodation expenses, received by employees under 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 that exceeds the non-taxable ceiling established as follows:

(i) in the country, 2,5 times the legal level established for compensation, by Government Decision, for the staff of public authorities and institutions, within the limit of 3 basic salaries corresponding to the job occupied;

(ii) abroad, 2,5 times the legal level established for the daily allowance, by Government Decision, for the Romanian staff sent abroad for the fulfillment of temporary missions, within the limit of 3 basic salaries corresponding to the job occupied. “”

The limit for the value of 3 basic salaries corresponding to the job occupied is calculated by reporting the 3 salaries to the number of working days in that month, and the result is multiplied by the number of days in the period of delegation / detachment / carrying out the activity in another locality, in the country or abroad;”

The daily allowance shall be granted to each employee who is sent on a mission of service:

• at a distance of at least 5 km from the locality where the employee has his job;
• for a period of not more than 60 calendar days per year;
• only if the travel time is at least 12 hours.

Amounts exceeding these limits shall be taxed with all salary contributions per payroll.

We will present 2 ways of calculating the internal and external daily allowance:

• Internal daily allowance – an employee with a gross salary of 2.700 lei goes to the internal delegation for which he benefits from the daily allowance. The trip takes place in May 2022 and lasts 5 days.
  • Allowance/day= 50 lei;
  • It could therefore benefit from the daily allowance 5*50 = 250 lei.
  • Since the daily allowance of 250 lei is less than 1.227 lei, the daily allowance granted will not be taxed.

• External daily allowance – an employee with a gross salary of 2.700 lei goes to the external delegation for which he benefits from the daily allowance. The trip takes place in May 2022 and lasts 5 days.
  • Allowance/day = 80 euro/zi;
  • It could therefore benefit from the daily allowance 5 * 80 euro = 400 euro (we use a euro rate of 5 lei/euro) = 2.000 lei;
  • Once this amount is established, we must check whether we fall within the second limit, which is calculated as follows: (3* 2.700 / 22) * 5 = 1.227 lei;
  • The daily allowance exceeds 1.227 lei, so the difference of 773 will be taxed (2.000 lei – 1.227 lei) on the payroll with all salary contributions.

The alternative for the company in this case, if it is to avoid over-taxing, is to reduce the amount of daily allowance granted in such a way as to fall within the ceiling established by law.