But why are we talking about an individual employment contract if we mentioned a service contract in the premises?
According to Article 7 of the Romanian Tax Code, a dependent activity is any activity carried out by an individual in an income-generating employment relationship.
If an activity meets at least 4 of the 7 conditions mentioned below, it qualifies as a self-employed activity:
- the individual is free to choose where and how to carry out the activity and the working hours;
- the individual is free to carry out work for several clients;
- the risks inherent in the activity are assumed by the individual carrying out the activity;
- the activity is carried out using the assets of the individual carrying it out;
- the activity is carried out by the individual using his intellectual capacity and/or physical performance, depending on the specific nature of the activity;
- the individual is part of a professional body/organization with the role of representation, regulation and supervision of the profession carried out, according to the special normative acts regulating the organization and exercise of that profession;
- the individual has the freedom to carry out the activity directly, with employed staff or through collaboration with third parties under the conditions of the law.
In the case of a flight crew member, criterion 1 is not met because he/she is not free to choose where and how to work and the working hours, which are imposed by the airline. In addition, criteria 3, 4 and 7 are also not met, so that it can be said that the activity of our flight crew member is, in all respects, a salaried activity.
Since the activity is considered dependent, the social security contributions due are those relating to the salary income obtained under an individual employment contract, even if the parties have concluded a contract for the provision of services.
Article 21 of EC Regulation 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems provides:
- An employer whose registered office or representative office is outside the competent Member State (in this case Romania) is obliged to comply with all the obligations laid down by the legislation applicable to its employees, in particular the obligation to pay the contributions provided for in that legislation, as if its registered office or representative office were in the competent Member State.
- An employer who does not have a representation in the Member State whose legislation is applicable may agree with the employee that the latter may fulfil the employer’s obligations on his behalf as regards the payment of contributions, without prejudice to the employer’s basic obligations. The employer shall make such an agreement known to the competent institution of that Member State
In Romania, the reporting of wage income received from abroad is regulated by the National Agency for Tax Administration Order (OANAF) no. 3706 /27 December 2016 for the approval of the Procedure for the registration of agreements concluded by non-resident employers who do not have a registered office, permanent establishment or representative office in Romania and who owe compulsory social contributions for their employees, according to the provisions of the applicable European legislation in the field of social security, as well as the agreements on social security systems to which Romania is party, and other procedural aspects.
As regards the payment of taxes on income from salaries, account must also be taken of the double taxation agreements that Romania has concluded with various countries. The main cases concern:
- Countries with an income tax treaty in the country where the airline is headquartered
- Countries with a treaty providing for taxation of income only in the employee’s country of residence.
As a general rule, wage income earned by non-resident individuals working in Romania is taxable if the individual is present in Romania for one or more periods exceeding in total 183 days in any period of the 12 consecutive months ending in the calendar year in question or in the period and under the conditions specified in the double taxation convention concluded between Romania and Italy and only if the individual proves his residence in Italy by means of a tax residence certificate issued by the competent Italian authority.
If flight crew members work for more than 183 days in Romania, they are also required to complete and submit to the competent tax agency the Tax Residency Questionnaire upon arrival in Romania, which must be submitted to the competent authority within 30 days from the date on which the 183 days of presence in Romania are completed.
The legislation governing the employment relationships of flight crew members is not entirely clear and well defined and we believe that in some cases the protection of this category of workers is lacking.
If you are a worker belonging to this category and have chosen to be based in Romania, we are sure that you are interested in finding out what obligations the employment/service contract entails for you – a non-resident individual – on Romanian territory.
We are at your disposal for any needs, clarifications or support.