Amendments to the conditions for application of income tax exemption to software engineers


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A new legislative Order has introduced changes regarding the tax exemption available on the wages of IT professionals. In order to decide who will benefit from said tax exemption certain conditions must be met, as follows:

• Reintroduction of the EUR 10,000 threshold

In order to benefit from the income tax exemption for software engineers, the employer must have earned at least EUR 10,000 per software engineer during the previous fiscal year.

• Removal of the condition requiring software to be part of a “final product”.

Employees of economic operators operating on the territory of Romania in accordance with the legislation in force, whose scope of activity includes the creation of computer programs (CAEN code 5821, 5829, 6201, 6202, 6209), benefit from the tax exemption on income from Wages and salaries, if the following conditions are met cumulatively:

(A) the posts they are assigned correspond to the list of occupations as: Administrator, Analyst, System engineer,  Project manager,Programmer, System Designer, Computer system engineer ;

B) the post is part of a specialized computer department, highlighted in the employer's organization chart, such as: department, department, office, office, compartment or the like;

C) they hold a diploma awarded after completing a form of long-term higher education or hold a diploma awarded after the completion of the first cycle of undergraduate studies issued by an accredited higher education institution and actually carry out one of the specify activities ;

D) the employer realized in the previous fiscal year and recorded separately in analytical balances the revenues generated from the activity of creation of computer programs for marketing;

E) the estimated annual incomes have a value of at least the equivalent in lei of EUR 10,000 for each employee benefiting from the tax exemption on income.

Under the new Order, any software development activity, whether or not it is included in a final product, that complies with the specific occupations mentioned in the Appendix will benefit from the tax exemption. The previous condition, according to which the software had to form part of a “final product”, is thus eliminated, being deemed to have generated too much confusion in practice.

The new provisions enter into force on 1 July 2017.

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