Starting August 1, 2025, Romania will implement a significant overhaul of its Value-Added Tax (VAT) system, impacting both domestic and foreign businesses operating in the country. These changes aim to simplify the VAT structure while also addressing fiscal consolidation goals.
Key VAT changes
- Romania’s standard VAT rate will rise from 19% to 21%. This marks the first increase in the standard rate since it was reduced in 2017 and aligns with broader regional fiscal tightening trends.
- A new reduced VAT rate of 11% will replace most current reduced rates, including the widely used 5% and 9% rates. This leaves only two applicable VAT rates in the Romanian system going forward:
- 21% – Standard rate
- 11% – Reduced rate
What falls under the 11% VAT rate?
The following goods and services will shift to the 11% reduced rate:
- Food
- Medicines
- Books and printed publications
- Water services
- Hotel accommodation and restaurant services
This adjustment is expected to affect pricing and compliance across multiple sectors, particularly in retail, hospitality, and healthcare.
There is a temporary exemption for certain housing supplies. These will retain the 9% VAT rate until August 1, 2026, offering a transitional period for developers and real estate businesses to adapt.
Potential future adjustments
The Romanian government has indicated that the VAT rate for hotel and restaurant services could rise to 21% in the future, subject to further review. Businesses in these sectors should closely monitor legislative developments in the coming months.
Implications for businesses
These VAT changes will require updates to invoicing systems, pricing strategies, and compliance processes. Businesses supplying or purchasing goods and services in Romania should review their contracts and systems to prepare for the new rates.
For more detailed analysis, see: https://mfinante.gov.ro/static/10/Mfp/transparenta/proiectLegemasurifiscale_03072025.pdf
