Companies who resort to this method of evading the law are exempted from paying social security taxes, which are very high in Romania compared to other countries in the region. At present, for a net wage of RON 1,000, an employer pays taxes worth RON 800. The period for which the company can benefit from tax exemption cannot exceed three months, so that firms rotate their employees on temporary leave for this period. The company thus pays only 75 percent of the net salary, while the rest is paid “under the table” to the employee.
“I have heard of such practices. This is a new way of defrauding the system, which results from the exacerbated needs of the crisis – at the moment some companies found themselves with a knife at their throats, they are forced to deviate from principles. They have no choice, especially when they are faced with disloyal competition from those who are already defrauding the system,” said Gabriel Biris, Tax Attorney.
