Romania implemented a sweeping overhaul of its Value Added Tax (TVA) system on 1 August 2025, under Law No. 141/2025 signed by President Nicuşor Dan. The reform represents the first general VAT rate increase in Romania since 2016 and introduces the most significant simplification of the country’s VAT structure in years.
The key changes are: the standard VAT rate has increased from 19% to 21%, and the previous dual reduced rates of 5% and 9% have been consolidated into a single reduced rate of 11%. Romania now operates with just two VAT rates — 21% standard and 11% reduced — eliminating the complexity of the previous three-tier system. The 11% reduced rate applies to food and non-alcoholic beverages, medicines, books and newspapers, water supply, agricultural products, hotel accommodation, and restaurant and catering services. A transitional 9% rate remains available until 31 July 2026 for certain residential property purchases meeting specific criteria.
The reform was driven by fiscal necessity. The Romanian Ministry of Finance identified that, as of August 2025, approximately 698,000 companies had accumulated over RON 1.7 billion in tax debts — in part due to the complexity of the previous reduced rate structure. The VAT increase is forecast to raise approximately RON 6 billion (~€1.2 billion) per year in additional state revenue, and is part of a broader fiscal package designed to reduce Romania’s public deficit and maintain EU financial support. Romania also announced an increase in dividend withholding tax from 10% to 16%, effective January 2026.
For businesses operating in Romania, the practical implications are immediate. Companies must update their invoicing and billing systems, point-of-sale software, online platforms, and contracts to reflect the new rates. Products and services previously taxed at 9% that do not fall within the 11% reduced rate categories are now subject to the full 21% standard rate. The Romanian tax authority (ANAF) has issued an updated VAT return form (Form 300) for use from the August 2025 reporting period onward.
???? Key Takeaway: Romania’s VAT system has been simplified to two rates — 21% standard and 11% reduced — effective 1 August 2025. Businesses operating in Romania must update their systems, pricing, and contracts immediately to remain compliant with Law No. 141/2025.
Need assistance with Romanian VAT registration or compliance? Contact CORPEASE LEGAL at info@corpeaselegal.com
