Deloitte: Romania's gross minimum wage above CEE average, effective tax rate highest in region

Romania's gross minimum wage exceeds the Central and Eastern European average, but at the same time the country has the highest effective tax rate in the region, specifically 41.5 percent, shows a survey by Deloitte Romania.

The effective tax rate is the highest, at 41.5 percent, for a gross wage of 1,000 euro, whilst the region's average is 27 pct.

"Following the transfer of social security contributions to the employee and the rise of the gross minimum wage, the one announced for December 1, 2018 included, Romania came to exceed the region's average gross minimum wage of 421 euro, leaving five states behind. Conversely, the other 10 countries have lower effective tax rates, with the average standing at 21 pct, compared to 41.5 pct in Romania," says Raluca Bontas, Partner - Global Employers Services, Deloitte Romania.

The survey by Deloitte Romania, based on the calculations provided by Deloitte member firms, includes Romania, Bulgaria, Serbia, Croatia, Hungary, Slovakia, the Czech Republic, Poland, Estonia, Lithuania and Latvia. For Romania, the gross minimum wage considered was 2,080 lei, the amount that would come into force in December 2018, as per the government's announcement.

The survey found that the gross minimum wage varies in the CEE between 500 euro (Estonia) and 261 euro (Bulgaria), and the average stands at 421 euro. Estonia has the lowest effective tax rate on the minimum wage of 4 pct, followed by Lithuania (10 pct) and the Czech Republic (14 pct), while Romania tops the ranking with 42 pct, twice the average of 21 pct.

The effective tax rate for a gross wage of 1,000 euro is highest in Romania (42 pct), followed by Hungary (34 pct) and Latvia (29 pct), while the countries with the lowest rate are Estonia (13 pct), Bulgaria (22 pct) and Lithuania (23 pct).

Romania has the lowest contributions due by the employer (2.25 pct), as the average is about 23 percent. AGERPRES (RO - author: Nicoleta Gherasi, editor: Andreea Marinescu; EN - author: Simona Klodnischi, editor: Simona Iacob)