- Starting in August 2025, Romania will maintain its standard VAT rate at 19% but will eliminate most preferential VAT rates, retaining reduced rates only for food and medicines, as part of a fiscal policy compromise aimed at increasing state revenues without raising the general VAT rate.
- The current 5% and 9% VAT rates applied to various goods and services, such as cultural events and books, will be increased, although the specific new rates have yet to be determined. The decision will be formally included in the coalition protocol, with the possibility of further increases based on an evaluation in October.
- The October assessment will evaluate the fiscal impact of the new VAT structure and other measures, and if deemed insufficient, the standard VAT rate could rise from 19% to 21% starting January 1, 2026. Additional fiscal measures under consideration include increased excise duties on tobacco, new taxes on gambling, and cuts to institutional expenditures.
Source
EC expects Romania’s fiscal plan in two weeks and requires bi-annual reporting
- The European Commission has set a revised fiscal consolidation trajectory for Romania, requiring annual updates under the Excessive Deficit Procedure (EDP) with an initial deadline of October 15. This follows Romania’s fiscal slippage last year, which deviated from the established 7-year consolidation plan.
- Romania’s new fiscal plan, due by July 8, aims to address significant increases in net expenditures, which were projected to rise excessively in 2024. The Commission now sets more stringent nominal growth rates for net expenditures at 2.8% for 2025 and 2.6% for 2026, compared to previous projections that allowed for higher increases.
- The implementation of tax reforms, including adjustments to the non-taxable threshold for pension income, is crucial for achieving the required fiscal impacts. If not effectively enforced, these reforms may not sufficiently offset last year’s fiscal slippage, risking sanctions from the European Commission and negative assessments from rating agencies.
Source Romania-insider
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