Romania increases VAT rate and unified reduced rate from August 2025

On 25 July 2025, Romanian President Nicușor Dan officially signed and promulgated the fiscal law increasing the standard VAT rate from 19 % to 21 %, effective 1 August 2025. The law includes adjustments to VAT, excise duties, dividend tax, and health contributions. The new VAT rates represent the first general rate increase in Romania since 2016.

The draft law introduces the following VAT changes:

• Standard VAT rate to increase from 19% to 21%
• Reduced VAT rates to be consolidated into a single 11% rate, replacing the current 5% and 9% tiers

This new unified 11% rate applies to a broad range of goods and services, including:

• Food and nonalcoholic beverages
• Certain pharmaceutical products and medical devices
• Hotel accommodation and restaurant services
• Books, newspapers, and periodicals (digital and print)

Full details of the applicable goods and services are expected to be clarified in secondary legislation.

Alongside the VAT changes, the law proposes:

• New or amended bank taxation
• Adjusted excise duties on alcohol, tobacco, and energy products
• Revisions to dividend tax rates and mandatory health insurance contributions — planned for January 2026

The Romanian government expects these changes to strengthen public finances and bring Romania’s fiscal regime closer in line with other European Union (EU) member states. However, the measures may also create near-term compliance challenges for businesses operating in or selling to Romania.

If you sell goods or services in Romania — either locally or as a cross-border supplier — you’ll need to update VAT rates in your ERP, ecommerce, and invoicing systems by August 2025.

Key areas to review:

• VAT configuration in ERP, billing system, tax engine, or other invoicing solutions
• Pricing structures, contracts, and pricing agreements
• Communications with customers regarding any changes to gross VAT-inclusive prices (B2C)

Changes to Romanian VAT rates will be reflected in Avalara AvaTax and Avalara VAT Reporting ahead of the planned implementation date.

If you’d like to discuss how tax technology and compliance automation can help reduce the headache of VAT changes, get in touch with Avalara today.