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When the law divides injustice

The structure introduced in December last year by Law 239/2020 is aimed at companies that spend on early education and can deduct these costs from income tax due.

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We have recently become accustomed to seeing legal rules that have no implementing rules, and so we do not know how to put them into practice without taking risks.

In addition, some regulations create confusion and inequalities between companies and/or their employees.

A concrete case is the structure introduced last December by Law 239/2020 that modifies the tax code. According to it, companies that pay early education deduct these costs from the tax on profit due, but no more than 1,500 lei per month for each child.

This is how a good intention can turn into discrimination between employees working in companies subject to corporation tax and those employed by companies subject to income tax.

In other words, a differentiation is made at the tax level: Companies that pay profit tax can recover the amounts granted to employees with children up to 7 years old by non-payment to the state budget of the amounts of income tax, wages tax, VAT, excise duties, and for micro-enterprises there is no such facility specified.

Owners of microenterprises may grant employees a maximum of 1,500 lei/month for children up to 7 years, but this amount cannot be recovered from income taxes or other taxes/contributions.

And that’s not the only questionable aspect of the law. There are still some unresolved issues which lead employers not to apply the regulation.

We consider it absolutely necessary to remedy the inequality created between the two categories of companies, and we also want implementing rules that answer the following questions:

  • we may or may not grant 1500 lei/month regardless of the form of education the employee’s child takes;
  • we can assign to an employee 1500 lei/month for each child or only for one of them;
  • the sum may or may not be granted for a maximum amount of employees working part-time or on a teleworking basis;
  • the payment shall be made directly or may be paid to the educational establishment;
  • the employee must or must not prove that he or she pays the full amount received for the school; if not, how will we know what the actual cost is;
  • may receive both parents 1500 lei/month each, or only one of them, and under what conditions;
  • what happens when the child does not attend the courses for various reasons, for example, is sick;
  • what happens during the period of suspension or reduction of work of the employee benefiting from the service;

The list of applications could continue. The longer employers are discouraged from applying this Regulation.