Moldova operates a tax system that includes personal income tax, social security contributions, and health insurance contributions, all of which are relevant to employment relationships. Employers play a crucial role in the collection and remittance of these taxes and contributions on behalf of their employees, as well as paying their own share of mandatory contributions.
Navigating these obligations requires a clear understanding of the applicable rates, calculation methods, and reporting procedures established by the Moldovan tax authorities. Employers are responsible for correctly calculating, withholding, and paying these amounts within specified deadlines to ensure compliance.
Employer and Employee Social Security Contributions
Employers and employees in Moldova are required to contribute to the state social insurance system (CAS) and the mandatory health insurance fund (CAM). These contributions are calculated based on the employee's gross salary, with specific rates applied to both the employer and employee portions. The employer is responsible for calculating and remitting both their own contributions and the employee's share, which is withheld from the employee's gross pay.
The rates for 2025 are expected to be based on the current structure:
| Contribution Type | Payer | Rate | Calculation Base |
|---|---|---|---|
| State Social Insurance (CAS) | Employer | 18% | Gross Salary |
| State Social Insurance (CAS) | Employee | 6% | Gross Salary |
| Mandatory Health Insurance (CAM) | Employer | 4.5% | Gross Salary |
| Mandatory Health Insurance (CAM) | Employee | 4.5% | Gross Salary |
There may be maximum contribution bases for social insurance, which are typically updated annually. Contributions are generally calculated on the gross salary before any personal income tax allowances are applied.
Personal Income Tax (PIT) Withholding
Moldova applies a flat rate for personal income tax on employment income. Employers are obligated to calculate and withhold this tax from the employee's gross salary after deducting the employee's mandatory social and health insurance contributions and applicable personal allowances.
The flat PIT rate for individuals is currently 12%.
The calculation of taxable income for PIT purposes involves: Gross Salary MINUS Employee Social Insurance Contributions (CAS) MINUS Employee Health Insurance Contributions (CAM) MINUS Applicable Personal Allowances EQUALS Taxable Income
The employer then withholds 12% of this taxable income.
Employee Tax Allowances and Deductions
Employees in Moldova are entitled to certain personal allowances that reduce their taxable income for PIT purposes. These allowances must be considered by the employer when calculating the amount of PIT to withhold.
The main allowances include:
- Standard Personal Allowance: A fixed annual amount available to most residents. For 2025, this amount is expected to be based on the current level, potentially adjusted.
- Increased Personal Allowance: Available to certain categories of individuals, such as participants of the Chernobyl cleanup, veterans, persons with disabilities, etc. This amount is higher than the standard allowance.
- Allowance for Dependents: An additional allowance is available for each dependent person maintained by the taxpayer. Dependents typically include children under 18, students under 25, and certain other relatives who meet specific criteria. An increased allowance per dependent is available if the dependent is a person with a severe or pronounced disability.
Employers must obtain necessary documentation from employees to apply these allowances correctly.
Tax Reporting and Payment Deadlines
Employers in Moldova are required to report withheld taxes and contributions and pay them to the relevant state budgets on a regular basis. The primary reporting mechanism is the monthly declaration, Form IPC21 (Declaration regarding income tax withheld, social insurance contributions and mandatory health insurance contributions).
Key deadlines include:
- Monthly Reporting and Payment: The IPC21 declaration must be submitted, and the corresponding taxes and contributions paid, by the 25th day of the month following the reporting month. For example, for salaries paid in January, the report and payment are due by February 25th.
- Annual Reporting: While the monthly IPC21 is the main reporting form, there may be additional annual information reporting requirements related to employee income.
Strict adherence to these deadlines is essential to avoid penalties and interest.
Special Tax Considerations for Foreign Workers and Companies
Tax obligations in Moldova depend significantly on the tax residency status of the employee.
- Resident Employees: Individuals considered tax residents of Moldova are subject to Moldovan income tax on their worldwide income. Employers hiring resident foreign nationals must apply the standard Moldovan tax rules, including withholding PIT and contributing to social security and health insurance, just as they would for Moldovan citizens.
- Non-Resident Employees: Individuals who are not tax residents of Moldova are generally subject to Moldovan income tax only on income sourced within Moldova. Employment income for work performed in Moldova is considered Moldovan-sourced. The tax treatment for non-residents can be complex and may be influenced by double taxation treaties between Moldova and the employee's country of residence. Employers hiring non-residents for work in Moldova must understand their withholding obligations, which may differ from those for residents.
- Foreign Companies without a Permanent Establishment (PE): A foreign company employing individuals in Moldova without establishing a registered entity or permanent establishment can face significant challenges regarding compliance with Moldovan labor and tax laws. In such cases, the foreign company may still have employer obligations, including tax withholding and social contributions, which can be difficult to manage remotely. Engaging an Employer of Record (EOR) service is a common solution in this scenario, as the EOR acts as the legal employer in Moldova, handling all local payroll, tax, and compliance responsibilities.
Double taxation treaties can provide relief from double taxation by allowing credits for taxes paid in one country against tax liability in the other, or by reducing withholding tax rates. The applicability of a treaty depends on the employee's residency and the specific provisions of the treaty between Moldova and the other country.
