Romania – Change in standard and reduced VAT rate

The Romanian Government adopted the draft law that proposes following changes in VAT rates:

• Increase in the standard VAT rate from 19% to 21%,
• Replacing existing 5% and 9% reduced VAT rates with a new rate of 11%,

The draft law still requires the President approval before it is implemented, however as per the draft changes are to be effective from 1st August 2025. Once approved, taxpayers will not have huge amount of time to implement changes into their systems. Therefore, businesses should ensure they review official government announcements and seek professional advice to understand specific change, transitional rules or any exceptions such as how to handle contracts that span over the change in rate or how to deal with pre-paid goods and services to accurately update accounting software on time to stay compliant.