GHEORGHE PIPEREA:"In Romania, nobody cares about freelancers"

Emilia Olescu (Translated by Cosmin Ghidovean)
Ziarul BURSA #English Section / 06 martie 2019

"In Romania, nobody cares about freelancers"

Romanian freelancers, a category which includes a number of economics specialists, are facing a number of difficulties in their activity and no one cares about them and their problems, lawyer Gheorghe Piperea says.

According to him, the areas where such freelancers are very varied and not all of them are recorded with the Office of the National Trade Registry (ONRC).

Gheorghe Piperea said: "There are two categories of «freelancers» that aren't found at the ONRC. There are a lot of liberal professions - associations, notaries, bailiffs, insolvency practitioners etc. - which are not registered with the ONRC, and they represent about 50,000-60,000 individuals. At the same time, there are many liberal professions that may or may not be registered with the ONRC, namely tax and accounting experts, doctors, pharmacists, evaluators, accountants, journalists. We're talking about hundreds of thousands of people who work individually and are not registered at the Trade Registry.

For instance, landlords registered with the Tax Administration, are not mentioned at the ONRC. The rest are "certified individual professionals" (persoane fizice autorizate - PFA), individual businesses (II) and family businesses (IF). This kind of statistic is very important, because first of all, these individuals make their income from activities that are incur VAT. The worst thing is that these people individually pay their and social security contributions healthcare. There are freelancer categories that are being forced to retroactively pay healthcare contributions because the ANAF forgot to levy that tax between 2013-2018. This applies to about 45,000 individuals that could go into bankruptcy. If those amounts aren't collected, then after six years the tax administration will lose through prescription.

Absolutely nobody in this country cares about these people, and the problem is also a social one".

Piperea told us that there is a large number of individuals - around 2 million - that are "halfway between employee and self-employed individual", as they are paid with the minimum wage on their labor contracts plus other revenues through individual contracts.

"In those cases, all those taxes are the liability of the employee who is paid the minimum wage and even though there are times where people can get sick, have a child, they reach retirement age, nobody cares about their fate", Gheorghe Piperea further told us: "What should we do, under these circumstances? In terms of the legislation, first of all the healthcare and social security contributions should be capped at the 2017 level, through an Emergency Government Ordinance. Also, in the cases where people are paid the minimum wage, some investigations should be conducted to establish whether those people are being paid through alternative means as well. All contracts should be taxed similarly to the labor ones.

Also, the same tax breaks applicable to companies should be applicable in this area as well, says Gheorghe Piperea, who concluded: "For instance, if a company is allowed to deduct all kinds of expenses, then the same should happen to these entities. That is a very important advantage, because that means people are left with more disposable income. That means more output, more workforce, more money to the state budget. And if the expenses made off-the-books in the household, such as rent, the nanny, the maid etc., could be deducted based on invoices, they would bring these activities out in the open and the state budget would have more money. Such aspects should be brought up for discussion immediately".

Raiffeisen Bank: "Freelancers - a segment of bank customers that has potential"

Aside from their own resources, freelancers also have the ability to borrow from lenders.

OTP Bank told us that, for independent customers it has specific financing products available, which cover a diversified range of destinations both for working capital as well as for investments, (overdraft, unspecified consumer loans, loans for acquisition of properties, equipment). Those are aimed at liberal professions created on the basis of special laws, such as doctors, lawyers, architects.

The OTP Bank representatives told us: "This customer segment can also access pre-financing APIA funds, including «the Loan for the double pre-financing of APIA - SAPS subsidies», a product which is the only one of its kind at the present time on the Romanian banking market. It is aimed at PFA, IF and II customers, set up based on Government Emergency Ordinance no. 44/2008, with its subsequent amendments and completions, customers that use their farmland and request payment as part of the SAPS, including redistributive payment, payment for forestation and the payment for rural development compensation measures, as farmers".

The representatives of Raiffeisen Bank say that over the last few years, the number of available offers has increased, when it comes to the financing products dedicated to the entities organized as part of a professional order, PFA (authorized individual professionals) or freelancers. "Whether they are lawyers, doctors, notaries or accountants, the financing needs have diversified. For banks, they represent a segment of customers with potential, with a high degree of education and needs specific to their protection. The challenge for banks is to build an offer of operational and financing products adapted to the expectations of these passionate professionals, but who do not have available the resources of a company nor their options to access financing from specialized institutions".

Raiffeisen Bank has built a dedicated offer of operational and lending products, tailored to the specific needs of this segment and which would respond to the challenges which they have to deal with, according to the representatives of the bank.

Currently, the operational offer of the lender includes a current account package dedicated to the (Essential segment), supplemented by the range of services provided by the specialized companies in the group (leasing, fund management) and the offer of lending products. "The latter is more consistent and includes both guaranteed products, as well as unguaranteed products", the representatives of Raiffeisen Bank have told us, and they added: "In general, the financing needs generated by the current activity are addressed by Raiffeisen Bank through two types of funding: line of credit - overdraft and loans with installments.

The line of credit (overdraft) is, in this case, a product for the financing of the current activity subject to the customer having had an account opened with the bank for at least six months, because the granting principles concern the prior transaction activity of the customer using their current accounts.

In the case of loans repaid using installments, the functionality of the product involves a monthly repayment or adapted to the needs and specifics of the customer. Also, for certain amounts or certain purposes, no paperwork is needed. This allows the payment of rent, salaries or utilities, renovations, self-managed works, international trip expenses, consumables and other expenses generated by the day-to-day operations.

The funding of the needs for expansion through the acquisition of long term equipment - for instance for dentistry, computing for lawyers, jurists, doctors, evaluators, cars/farming machinery for small transportation firms, acquisitions/upgrading of headquarters, in general situations that require large investments - is ensured through the Investment Loan for Liberal Professions. The amortization period for these loans can be as long as 180 months in the presence of collateral, or shorter in their absence.

Also, for the entire range of financing products there is the option of accessing those loans using loan guarantee programs.

Last but not least, for entrepreneurs looking for challenges, the Factory program by Raiffeisen Bank is starting up again. The second edition of the startup projects has been launched. As part of this program financing can be obtained of up to 50,000 Euros/project, the equivalent in lei granted for investments/for direct activity. The program encourages the business initiatives of beginning entrepreneurs, including those included in the category of liberal professions".

Other banks also have products for the financing of liberal professions. One of them is Alpha Bank, an institution which offers "Alpha Cash Collector" - the first product of the kind in Romania dedicated exclusively to insolvency practitioners -, "Alpha IMM Turism" - a package dedicated to travel agencies, hotels or any other companies in the tourism sector -, "Alpha IMM Import Export" - which offers companies involved in international trade a number of advantages -, "Alpha Executor" - aimed at bailiffs and which allows the execution of foreclosure operations.

ONRC: 364,953 - the number of active individual enterprises and certified individual professionals on December 31st 2018

There 364,953 individual enterprises and certified individual professionals (PFA) on December 31st, 2018, according to information sent by the representatives of the ONRC. According to them, on the mentioned date, there were 117,481 individual enterprises and 247,472 PFA.

According to statistics from the institutions' website, on January 31st, 2019, the total number of individual enterprises, family enterprises and certified individual professionals (PFA) active was 391.651, with 424.688 titleholders. Most of them are aged between 40 and 49 (121,738), followed by people aged 30-39 (108,984).

There have been 35,969 enterprises and certified individual professionals registered with the Trade Registry, between January 1st - December 31st, (11,474 Individual Enterprises and 24,495 Certified individual professionals), according to the quoted source.

Throughout last year, 9,764 individual enterprises and 22,478 certified individual professionals have been deleted from the Trade Registry, according to data provided by its representatives.

75 individual enterprises and 31 certified individual professionals have entered bankruptcy last year.

"BURSA" together with the founding chairman of CONAF, Cristina Chiriac, have begun the promoting of female entrepreneurship since back in 2012, through a number of articles and conferences. The next event on the topic is set to take place on March 14th.

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