Presidential Decree no. 227/18, of 27 September 2018, has introduced new regulations regarding contributions to the Mandatory Social Protection.

The primary change relates to the inclusion of additional pay elements in the calculations. In the past, the social security contributions were calculated on gross remuneration. This Decree dictates that when calculating the contributions, gross remuneration including all cash benefits that are payable by the employer to the employee (subject to the below exemptions), must be used. Therefore, if the employee earns part of his or her remuneration in kind, the equivalent cash value must be calculated for the purposes of establishing the contribution base.

Even though the contribution rates have remained unchanged (3% to be paid by the employee and 8% by the employer), the resultant effect will increase the contribution base and concomitantly, lead to higher social security contributions and a lower net pay for some employees.

Employers will have to decide whether they gross up for the reduction in net pay or accept that employees will receive a lower net pay each month.

Only the following remuneration elements are exempt:

  • Welfare benefits paid by employers in the context of Mandatory Social Protection (e.g., family allowance); and
  • Holiday bonuses; and
  • Amounts relating to the forms of complementary social protection provided for in separate legislation.

Stringent rules now apply to employers:

  • The amounts retained by employers must be paid monthly, by the 10th day of the month following the month to which the contributions relate.
  • The penalties include default interest of 1% per month, charged on the amount of the initial capital of the debt. The previous rules established a rate of 2.5% default interest per month, charged on the amount of the debt.


The introduction of this new legal framework for social security

contributions will come into force on 26 December 2018.