Rent paid by employers for their employees – requirements and applicable tax regime

According to art. 76 par.4¹) let. c) of the Tax Code, in case the employer provides their employees with accommodation/housing spaces, for which the employer pays rent, the amount of said rent is tax free within the limit of a non-taxable ceiling of 20% of the minimum gross basic salary guaranteed in payment per month for each person, under the following conditions:

• the benefit must be stipulated in the labour agreement or in the internal regulation or in the collective labour agreement;
• the amount granted, cumulated with the rest of the benefits mentioned at art. 76 par. 4¹) of the Tax Code, must fall within the monthly ceiling of up to 33% of the employee’s basic salary;
• the employee or his/her spouse does not own a personal property or lease a place in the city where the activity is carried out;
• the accommodation/living space is located in owned units, including hotel type accommodation or in a property rented for this purpose from a third party by the employer;
• the lease agreement between the employer and the third party is concluded under the law;
• the tax free ceiling is granted to only one of the spouses, in case they both work in the same city, at the same employer or at different employers, based on their statutory declaration.

The ceiling of 20% of the minimum gross basic salary guaranteed in payment takes into account the lowest value of the national minimum gross salary, in force in the month for which the benefits are granted.

Verifying the compliance with the conditions is based on supporting documents and it is the employer’s responsibility.

In case one of the aforementioned requirements is not met, the value of the rent borne by the employer becomes entirely taxable and must be added to the payroll.

The part that exceeds the aforementioned non-taxable limit represents a benefit in kind, to which all salary taxes apply, just like in the case of a bonus, and it must be added to the payroll.

Both the taxable and the tax free parts must be declared by the employer in D112 – Statement regarding the payment liabilities of social contributions, of income tax and the nominal record of insured persons.