Starting from February 1st, 2018, new rules shall apply with regard to the income tax exemption applicable to individuals that obtain salaries and similar income from software development activities. These rules are set under joint Order no. 1.168/2017/ 492/2018/ 3.024/2018/ 3.337/2017 of the Ministry of Communications and Information Society, the Ministry of Labour and Social Justice, the Ministry of National Education and the Ministry of Public Finance, regarding the qualification as software development activity (the “Orders”), as published in the Official Gazette of Romania, Part I, no. 52, dated January 18th, 2018.
As per the new rules, the following individuals may benefit from the income tax exemption, in addition to the previous regulations:
- individuals that hold a high school diploma and attend the courses of an accredited higher education institution; Previously, this exemption was available only with respect to the employees who held at least a bachelor’s degree.
- individuals that hold a diploma granted after completing short-term higher education studies;
- individuals that occupy the position of “Deputy Programmer” or “Deputy Analyst” and perform the activities provided for under the new rules. Higher education studies are not required for these two new positions.
Apart from the issues listed above, the conditions under which IT employees can benefit from the income tax exemption remain unchanged as of February 1st, 2018, and must be cumulatively met, as follows:
- the positions, including occupations, correspond to the following: Database Administrator, Analyst, System Engineer in Computer Science, Software System Engineer, IT Project Manager, Programmer, Information System Designer, Information System Programmer. Under the new rules, these positions are supplemented by those mentioned under item (iii) above.
- the positions are part of a specialized department, highlighted in the organizational chart;
- in the previous tax year, the employer obtained revenues from software development activities conducted for trading purposes and recorded such revenues, separately, in the analytical balance sheets;
- the abovementioned revenues amount to at least the equivalent of EUR 10,000 (calculated according to the average monthly exchange rate established by the National Bank of Romania for each month in which such revenues were recorded) per each employee who is exempt from income tax.
The new rules also bring certain clarifications regarding the supporting documents that have to be taken into account for enrolling individuals in the category that benefits from income tax exemption as a result of conducting software development activities.