Romania VAT Briefing: Key Updates and Developments (July – August 2025)

This document summarizes key VAT and tax-related changes and challenges in Romania, primarily focusing on developments in August 2025, based on the provided sources.

I. Key Themes and Developments:

• VAT Rate Restructuring (Effective August 1, 2025): A significant overhaul of the VAT system has occurred, driven by the need to reduce the budget deficit and align with EU regulations. The standard VAT rate has increased from 19% to 21%. The previous reduced rates of 5% and 9% have been consolidated into a single reduced rate of 11%.
  • “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.“
  • “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.“
• Scope of the 11% Reduced VAT Rate: The 11% rate applies to a range of goods and services deemed essential, including medicines, food (with some exclusions), water supply, agricultural inputs, books, cultural sites, firewood, thermal energy, social housing, hotel accommodation, and restaurants (with some exclusions like alcohol and sugary drinks).
  • “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.“
• Impact on Housing and Real Estate: The increase in the VAT rate for new housing from 9% to 21% is a significant change. A transitional period exists, allowing a reduced 9% rate under specific conditions (e.g., contracts signed with a 20% advance payment by July 31, 2025) for certain housing transactions until August 1, 2026.
  • “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“
• Excise Duty Increases: Excise duties on various products, including gasoline, diesel, alcohol, and sugary drinks, have increased by approximately 10% on average, effective August 1, 2025. New excise duties have been applied to still wines and fermented beverages.
  • “Starting August 1, 2025, excise duties on a wide range of products will increase by approximately 10% on average, affecting categories such as gasoline, diesel, alcohol, beer, wines, and sugary non-alcoholic beverages.“
• Tax Reforms Timeline: The fiscal measures were applied in two stages, starting August 1, 2025, and January 1, 2026. The dividend tax will increase to 16% starting January 1, 2026.
• E-Invoicing and SAF-T Implementation: Romania is actively implementing electronic invoicing (RO e-Factura) and SAF-T reporting to improve tax compliance and combat fraud. RO e-Factura is mandatory for B2B and B2C transactions. Non-resident taxpayers registered for VAT in Romania must also comply with SAF-T reporting (Form D406).
  • “The grace period for the RO e-TVA system ended on July 1, 2025, requiring taxpayers to respond promptly to e-TVA notifications to avoid fiscal risk or fines.“
  • “As of January 2025 , non-resident taxpayers registered for VAT in Romania must also comply with SAF-T reporting:“
• VAT Fraud Concerns: Romania faces significant challenges related to VAT fraud, with the highest VAT shortfall in the EU. The EU Prosecutor has criticized Romania for its low detection and reporting rates. There are concerns about the involvement of organized crime, including Italian and Chinese mafias, in VAT fraud schemes.
  • “EU’s top prosecutor criticizes Romania for not detecting and reporting VAT fraud. Romania has the highest VAT shortfall in the EU at 30.6 percent.“
  • “VAT fraud is more profitable than human or drug trafficking.“
• ANAF’s Efforts to Combat Tax Evasion: ANAF is undertaking several measures including verifying potential profit exports for companies, specifically targeting illegal VAT deductions on luxury cars, and implementing RO e-Factura and SAF-T reporting to increase transparency and compliance. They are also working on consolidating global data and digitalization.
• VAT Exemption for NGOs: Romania is ending indirect VAT exemption for NGOs. The change took effect August 1, 2025.
• Updates for Virtual Events: The ordinance specifies that the place of supply for services related to virtual events, such as cultural, artistic, and educational activities, is determined by where the recipient resides. The amendment took effect September 1, 2025.
• VAT Form Updates: ANAF released a draft order to update the VAT return form on 19 August 2025, reflecting VAT rate changes effective 1 August 2025.

II. Challenges and Opportunities:

• Compliance Burden: Businesses face an increased compliance burden due to the VAT rate changes, mandatory e-invoicing, and SAF-T reporting. Adapting accounting practices and updating ERP systems are crucial. SAP-driven businesses specifically face operational challenges due to these last-minute changes.
• Technical Implementation: Implementing new systems like RO e-Factura and SAF-T has presented technical challenges, including system validation issues and difficulties in data reporting.
• Combating VAT Fraud: Addressing the widespread VAT fraud requires stronger enforcement mechanisms, improved detection and reporting, and collaboration with international bodies. The government is working on methods to identify and control these illegal activities.
• Economic Impact: The VAT rate increases are expected to impact various sectors, including real estate, the food industry, and NGOs. The economic and social consequences require careful monitoring. However, the goal of the reforms is to reduce the budget deficit and avoid economic default.

III. Key Dates:

• August 1, 2025: Effective date for the new VAT rates (21% standard, 11% reduced), excise duty increases, and the end of VAT exemptions for NGOs.
• September 1, 2025: New virtual events regulations effective.
• September 25, 2025: VAT returns due using the updated form.
• January 1, 2025: Non-resident taxpayers registered for VAT in Romania must comply with SAF-T reporting.
• January 1, 2026: Dividend tax increases to 16%.
• August 1, 2026: End of transitional period for 9% VAT on qualifying housing transactions.
• October 1, 2025: Delayed mandatory RO E-Invoices for some taxpayers

IV. Glossary of Key Terms (from source materials):

• ANAF (Agenția Națională de Administrare Fiscală): The National Agency for Fiscal Administration in Romania, responsible for tax collection and enforcement.
• VAT (Value Added Tax): A consumption tax assessed on the value added to goods and services at each stage of production or distribution.
• Excise Duties: Taxes imposed on specific goods such as fuel, alcohol, and tobacco.
• RO e-Factura: Romania’s electronic invoicing system, which mandates the use of electronic invoices for certain transactions.
• SAF-T (Standard Audit File for Tax): A standardized electronic file containing accounting and transactional data, required for tax auditing purposes.
• SPV (Spațiul Privat Virtual): The Virtual Private Space, a platform used for electronic communication between taxpayers and the Romanian tax authority.
• Place of Supply: The location where a supply of goods or services is deemed to take place for VAT purposes.
• Input Tax Credit (Deduction): The VAT a business pays on its purchases which it can deduct from the VAT it charges on its sales.
• Exemption: A provision that excludes certain supplies of goods or services from VAT.
• VAT Fraud: Illegal activities aimed at evading VAT payments, often involving complex schemes and organized crime.
• ECJ (European Court of Justice): The court of the European Union which interprets EU law.
• Chargeable Event (Tax Point): The point in time at which the VAT becomes due.
• B2B: Business-to-business transactions.
• B2C: Business-to-consumer transactions.
• B2G: Business-to-government transactions.

This briefing document provides a high-level overview of the Romanian VAT and tax landscape as of August 2025. Businesses operating in Romania should consult with tax professionals to ensure full compliance with the new regulations.

---

In this serie

• Belgium
• Germany
• Italy 
• Poland
• United Kingdom

---

 

---

---