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Publish Date

Jul 03, 2025

Romania plans 21% standard VAT rate and 11% reduced rate from 1 August 2025 – What businesses must do now

Tax Insights

Key take-aways

  • New VAT rates: The Romanian Prime Minister has reintroduced legislation raising the standard VAT rate from 19% to 21% and replacing the existing 5% and 9% VAT rates by a new reduced rate of 11% with effect from 1 August 2025 (supply date driven).
  • Scope: The higher rates apply to all supplies currently taxed at the standard rate or reduced rates, including imports and cross-border B2C services.
  • Alignment with other reforms: The change coincides with mandatory B2C e-invoicing and the roll-out of SAF-T for small and non-resident taxpayers from January 2025.

What changes—and when

Timeline
Milestone
Practical impact
1 Jan 2025
Mandatory B2C e-invoicing & SAF-T phase-in
System upgrades and data extraction already required—rate change must be built into the same project plan.
2 Jul 2025
Official announcement
Businesses need to start preparing for the new VAT rates
1 Aug 2025
21% and 11% VAT rates become effective
ERP/tax engines must apply 21% to supplies with a supply date on/after 1 Aug 2025—even if the invoice is dated earlier/later.

Impact analysis

For businesses issuing Romanian VAT invoices

  1. ERP & tax engine updates – Add new 21% and 11% codes, map correct GL accounts, test cut-off logic.
  2. Cut-off rules – Automate supply-date checks to prevent old-rate application to post-1 Aug 2025 supplies.
  3. Contract & pricing review – Re-price gross B2C contracts or amend net-price clauses in B2B contracts where VAT is seller’s cost.
  4. Master data clean-up – Align customer tax categories, especially for distance-selling and OSS reporting.
  5. Governance – Ensure Account Receivables and Order to Cash (O2C) are aware of the incoming VAT rate change.
  6. External communication – Align with key customers and/or wider base to ensure a smooth transition with the new VAT rate, reduce potential invoice rejection and communicate chosen pricing strategy.

For businesses receiving Romanian VAT invoices

  1. Invoice validation – Update three-way match rules to accept 21% and 11% for supplies dated 1 Aug 2025 or later.
  2. Input VAT deduction timing – Ensure AP teams recognise the correct tax point to avoid under- or over-claiming.
  3. Budgeting & cash-flow – Factor in the increased VAT rate when modelling Romanian cost bases for H2 2025.
  4. Governance – Ensure Account Payables (AP) & Procure to Pay (P2P) are aware of the incoming VAT rate change.
  5. External communication – Align with key suppliers and/or wider base to reduce potential invoice rejection and de-risk vendor relationship potential challenges.

Beyond the headline rate

Area
Why it matters
Action
E-Invoicing
B2C invoices must be issued via the RO e-Factura platform from 1 Jan 2025.
Ensure e-Factura integration supports the 21% rate code.
SAF-T
First SAF-T returns for small/non-resident businesses due in July 2025 (June period).
Map the new VAT code to the correct SAF-T boxes.
Pricing strategy
Consumer sensitivity to price increases is high.
Decide whether to absorb, partially pass on, or fully pass on the VAT rate increases.
Systems testing
Dual-rate period risk between approval and go-live.
Run parallel invoicing tests covering Jul/Aug supplies.
Technology Vendors
Ensure appropriate system updates are being passed through to 3rd party systems such ERP, Tax engine and VAT return platforms.
Contact vendors to understand rate change plan and align with internal IT team if needed to de-risk potential gap in tax rate accuracy being applied.

A&M viewpoint

The VAT rate rise may look modest for most products and services, but the combination of rate change, e-invoicing, and SAF-T makes 2025 the most complex VAT year in Romania since 2016. Early alignment across IT, Tax, Finance, Sales, and Procurement is essential to avoid pricing errors, non-compliant invoices, and blocked input VAT.

Need help? Our Indirect Tax and Technology teams can run a “VAT-21 readiness review” in two weeks, delivering a gap analysis, implementation roadmap, and testing script.

https://www.alvarezandmarsal.com/thought-leadership/romania-plans-21-standard-vat-rate-and-11-reduced-rate-from-1-august-2025-what-businesses-must-do-now