A new draft EGO provides further clarification on related companies
March 25, 2024Renata Ban
On 13 March 2024, a draft GEO appears on the website of the Ministry of Finance, clarifying the notion of “related enterprise”..
READ MOREAmong the facilities that companies can benefit from when calculating corporation tax are social expenses.
Read articleSocial expenses are certain types of expenses that companies can incur and which have a limited deductibility for corporate tax purposes. More specifically, social expenses are deductible up to a rate of 5% applied to the value of staff salaries, according to the Labour Code.
The classification of expenditure as social expenditure is important for corporate tax payers. Payroll expenses are those recorded in the accounts as gross payroll expenses.
Here are the types of expenditure that can be covered:
Expenditure under the collective labour agreement is expenditure of a social nature laid down in collective labour agreements at national, branch, group of units and unit level.
The deductibility of this expenditure is limited to 5% of staff salary costs, meaning that:
The nature of this social expenditure is specified in Article 25(3)(a) of the Tax Code. Paragraphs 1, 2 and 3 list the types of expenditure considered to be of a social nature; in paragraph 4 of this article the legislator leaves it up to the taxpayer to decide what other expenditure of a social nature he will grant for the benefit of employees. These other expenses will have to be included in the internal rules of the company. Therefore, in these rules you will indicate what other types of expenditure you wish to grant to employees.
As regards the transfer of money to electronic gift cards, since point 3 states that gifts in cash can also form part of social expenditure, without specifying the specific method of settlement of the sums, it appears that it is possible to grant sums via gift cards.