4. Trends and Specific Cases

a. New or Expected Developments

In some specific industries (such as the IT) there has been a decrease in the number of civil contracts being conducted, most companies using employees due to the special tax regime that the industry enjoys (no income tax for revenues generated by the IT industry). On the other hand, some other industries such as financial management and legal services tend to rely more and more on civil contracts.

The differences in tax regime are less evident according to new regulations meaning that in the next period the use of independent contractors as a way to avoid a higher level of taxation will decrease.

One common practice in Romania is as described above the temporary use of employed force to provide services to another company than the employer, meaning that the em-ployer hires a number of individuals with specific qualifications that he uses to provide services to other companies. In this case the individuals are always employees and not individual contractors, being subordinated to their employer and not to the company that they are providing their service for. This has become the main way the companies avoid paying higher wages to their own employees, by contracting services at lower rates than the combined wages that they would have paid if they had used the employed force. The employees used in providing the services to the company are paid by their employer lower wages than the employees of the company they are performing services for. At this moment this is a legal business conduct.

b. Recent Amendments to the Law

As mentioned, starting 2016 the Tax Code has introduced new legal definitions for dependent and independent activities in order to ensure a more clear distinction between the two notions. The Government has put efforts into constructing a more balanced tax regime for each of the two categories of activities in order to avoid the use of civil contracts for activities that usually have to be performed by employees. Howev-er there are still no specific legal provisions on the re-characterization of independent contractors as employees, this being an issue that still needs to be addressed.