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Romania confirms VAT rate cut to 20% 2016

  • Aug 21, 2015 | Richard Asquith

Romania confirms VAT rate cut to 20% 2016

The Romanian Parliament confirmed on 20 August 2015 that the standard VAT rate would be cut from 24% to 20% on 1 January 2016. The rate would be reduced again to 19% in January 2017.

The Prime Minister, Victor Ponta, proposed a plan to cut to 19% in 2016 but this was opposed by the International Monetary Fund and EU which oversaw the country’s bailout during the financial crisis. This led to a watering down to a two stage cut.

The cut in Romanian Value Added Tax will increase the Romanian deficit to 2% in 2016 compared to the forecast 2015 figure of 1.8% - although this may prove optimistic. The is also risks adding to high growth in consumption and retail, and a rise in inflation. Romania had previously promised to creditors a GDP to deficit ratio of 1.2%.

Romania raised its VAT rate from 19% to 24% in 2010 at the height of the global financial crisis.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.