The draft law raises the VAT exemption threshold for small businesses to RON 395,000, with the SME scheme ceasing once national or EU turnover exceeds EUR 100,000. 

Romania’s government published a draft law for public consultation on 20 August 2025, which includes modifications to the VAT title of the Fiscal Code, as approved by the Fiscal Code (Law 227/2015).

The draft law transposes the Amending Directive to the VAT Directive (2020/285)  on the special VAT scheme for small enterprises, which EU Member States were required to adopt by 31 December 2024 and apply from 1 January 2025.

The special scheme for small enterprises (‘SME scheme’) enables small enterprises to sell goods and services to their customers without charging VAT (VAT exemption) and to benefit from certain simplifications regarding their compliance and invoicing obligations. This scheme is optional, so small enterprises can decide to apply it – provided that they fulfil the conditions – or to stick to the standard VAT rules and charge VAT to their customers.

The key provisions of the draft law:

  • Sets the national VAT exemption threshold for small businesses at RON 395,000 (up from RON 300,000).
  • The SME scheme stops applying once the national VAT registration or EU-wide turnover of EUR 100,000 is exceeded. However, transactions that exceed the threshold are not VAT-exempt.

Rules for utilising the SME scheme

The draft law establishes detailed rules for taxable persons using the SME scheme, covering those based in Romania who apply it domestically or in other EU Member States, as well as those based in different Member States who apply it in Romania. It also outlines the procedures to follow if the SME scheme no longer applies.

If approved, the draft law will take effect on 1 September 2025.