President Nicușor Dan has officially signed the fiscal package into law, including the VAT rate increases. The changes will take effect on August 1, 2025, raising the standard VAT rate to 21% and consolidating reduced rates into a new 11% rate
VAT Rate Changes
- Standard VAT rate increases from 19% to 21%
- Only one reduced rate remains: 11%, replacing previous 5% and 9% rates
Reduced 11% VAT Applies To:
- Medicines for human use
- Food products (excluding alcohol, sugary items over 10g/100g, and certain supplements)
- Water supply and irrigation services
- Agricultural inputs: fertilizers, pesticides, seeds, and related services
- Books, newspapers, and magazines (excluding those with predominant video/audio or advertising content)
- Access to cultural sites: museums, castles, botanical gardens, etc.
- Firewood and wood pellets for heating (with conditions)
- Thermal energy for heating (specific consumer categories)
- Social housing and related real estate (with strict definitions)
- Hotel accommodation and camping
- Restaurant and catering services (excluding alcohol and sugary drinks)
Real Estate Transition Rules
- Reduced VAT for housing (9%) ends August 1, 2025
- Buyers with antecontracts signed before August 1 must prove 20% advance payment to retain the reduced rate
️ Food Industry Impact
- Finished food products qualify for 11% VAT
- Raw materials (except live animals) taxed at 21%, creating pricing and refund complications
Other Notes
- VAT refund complexities expected in food/agriculture sectors
- HoReCa sector retains 11% rate for now, but may shift to 21% if revenue targets aren’t met
Source
See also
VAT Rate Changes Effective August 1, 2025
- Increase and Simplification of VAT Rates: Starting August 1, 2025, the standard VAT rate in Romania will rise from 19% to 21%, while reduced VAT rates of 5% and 9% will be eliminated, leaving a single reduced rate of 11% that will apply to specific goods and services.
- Goods and Services Subject to Reduced Rate: The 11% VAT rate will apply to a range of items including medicines for human use, food and beverages for human and animal consumption (with exceptions), water supply, fertilizers, schoolbooks, and accommodation services. Certain operational exemptions will also remain for social housing and specific services.
- Standard Rate Applicability: Goods and services that previously benefited from reduced VAT rates, such as photovoltaic panels, access to cultural and sports events, and medical equipment for nonprofit entities, will now be subject to the 21% VAT rate. A transitional arrangement will allow for a 9% rate on specific residential property transactions under certain conditions until July 31, 2026.
Source EY
New VAT Rates and Regulations in Romania
- Adjustments to VAT Rates: Starting August 1, 2025, Romania will implement new VAT rates, increasing the rate from 5% to 11% for certain goods and raising the rate from 9% to 21% for specific items, including cakes, seeds, and certain types of housing. The changes are part of a broader effort to strengthen the country’s fiscal framework.
- Transitional Measures for Social Housing: Individuals purchasing a single dwelling between August 1, 2025, and July 31, 2026, may qualify for a reduced VAT rate of 9%, provided they meet specific conditions, such as a maximum usable area and total value, and make a 20% advance payment by July 31, 2025.
- Business Compliance Requirements: Businesses must urgently set up cash registers or ERP systems to apply the new VAT rates effectively. They should be cautious about VAT rate adjustments for services paid in advance and ensure compliance with the conditions for applying the reduced VAT rate for social housing to avoid penalties or incorrect charges.
Source Nadia Oanea
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