The proposed draft bill aims to simplify VAT rates from three (19%, 9%, and 5%) to two, starting 1 August 2025.
Romania’s government submitted an amended draft bill to parliament on 4 July 2025, proposing changes to the VAT provisions of the Fiscal Code, approved initially through Law 227/2015.
The draft bill proposed reducing the current three VAT rates: 19% (standard rate), 9%, and 5% (reduced rates), to just two rates, effective from 1 August 2025.
The draft legislation is aimed at implementing key measures outlined in its 2025-2028 Government Program.
Key measures focus on VAT, which include:
Standard VAT rate
The standard VAT rate will increase from 19% to 21%, affecting supplies previously under the abolished 9% reduced rate. These include veterinary medicines, seeds, plants, food preparation ingredients, bee food, regulated food supplements, traditional cakes and biscuits, affordable housing (up to 120 sqm and RON 600,000), high-efficiency heating systems and solar panels (including repairs/extensions), and entry to fairgrounds, amusement parks, exhibitions, cinemas, and certain cultural events.
Reduced VAT rate
A new reduced VAT rate of 11% will replace the current 5% and 9% rates, affecting various goods and services. These include medicines, most food and beverages, water and sewerage services, agricultural supplies (e.g., fertilisers, seeds), and related services. The 11% rate will also apply to retirement homes, foster homes, rehabilitation centres for disabled children, hotel accommodations, campgrounds, and restaurant/catering services, excluding alcoholic and certain non-alcoholic beverages.
These new VAT rates will go into effect on 1 August 2025, with transitional measures for the 9% VAT rate on certain dwellings.
The draft legislation also proposed increasing the taxes for the following:
Dividend tax
Raised from 10% to 16%, effective 1 January 2026.
Bank turnover tax
Increased from 2% to 4% for the period from July 2025 to December 2026.
