The Chamber of Deputies on Wednesday passed, 254 to six abstentions, an amendment to the Tax Code to exempt from taxation not only the contributions to the pillar II pensions, but also the earnings on them, told Agerpres.
The provision is slated to enter into force on January 1, 2024.
The bill amending the Tax Code is devised to regulate the amount of taxable income when payments are to be made from privately managed pension funds, namely Pillar II, Pillar III, as well as the segment of occupational pensions in Romania.
Under the bill, the rights considered in accordance with Law 411/2004 on privately managed pension funds, Law 204/2006 on optional pensions and Law 1/2020 on occupational pensions are to be treated as pension income.
The Chamber also amended the provisions regarding the establishment of the taxable monthly pension income.
According to the bill, the taxable monthly pension income is established by deducting from the pension income the non-taxable monthly amount of 2,000 lei and, as the case may be, the social healthcare insurance contribution due according to title V - mandatory social contributions.
For the lump sums due to the contributors to the privately managed pension funds and their legal heirs, in accordance with Law 411/2004, the taxable income is made up of the amounts that exceed the net contributions of the participants capped as ceiling.
For the amounts received as annuities by the contributors to the privately managed pension funds and their legal heirs, in accordance with Law 411/2004, the taxable income consists of the amounts that exceed the net contributions of the participants subject to a cap as non-taxable income established for each monthly annuity from each pension fund.
For the lump sums to the contributors to the optional pension funds and/or the occupational pension funds and their legal heirs, in accordance with Law 204/2006 and Law 1/2020, the taxable income is made up of the amounts that exceed the net contributions of the participants capped as ceiling.
For the amounts received as annuities by the contributors to the optional and/or occupational pension funds, as well as by their legal heirs, in accordance with Law 204/2006 and Law 1/2020, the taxable income consists of the amounts that exceed the net contributions of the participants, subject to a cap as non-taxable income established for each monthly annuity from each pension fund.
"Romania has had three good reforms: the flat income tax, the micro-enterprise regime and Pillar II, three reforms that helped and continue to help the economy. The bill encourages Pillar II, the contribution to Pillar II is tax exempt, with the exception of earnings. If we want to no longer have a contest of who increases pensions more, to no longer have pensions dependent on the political factor, on the pen of a minister or party leaders, then the way, the solution is Pillar II. It is the only truly contributory pillar. Not the special pensions, or other types of special systems that favour some or others, but a system to which we really contribute, in which we all pay and we all have very good returns," says Save Romania Union (USR) MP Claudiu Nasui.
National Liberal Party (PNL) MP Mara Calista said that the bill is a very important one.
"The bill says that when a contract is concluded with a beneficiary of Pillar III and Pillar IV, the tax part, the 10% that the government takes away, should refer strictly to the return on investment and not to the contributions that each person pays into their individual accounts. The same provisions will be applicable to Pillar II," explained Calista.
The Chamber of Deputies is the decision-making body in this case.
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