Tax changes introduced by the new fiscal and budgetary measures

On July 25, 2025, it was published in the Official Monitor the Law no. 141 regarding certain fiscal and budgetary measures, including amendments and additions to existing fiscal legislation, as well as the introduction of other related provisions.

Among the most important tax changes, we mention the following:

VAT

Starting from August 1, 2025, the standard VAT rate will increase from 19% to 21%. As regards the reduced VAT rates (5% and 9%), they will be eliminated, and only a single reduced rate of 11% will be applicable.

Thus, the reduced VAT rate of 11% will apply to the following supplies of goods and services:

• Supply of medicines intended for human use (we note that for medicines for veterinary use that previously benefited from the reduced rate, the standard 21% VAT rate will apply).
• Supply of the following goods: foods, including beverages, intended for human and animal consumption, living animals and birds of domestic species, with certain exceptions for which the standard rate will apply, specifically: (i) alcoholic beverages, (ii) non-alcoholic beverages (juices, non-alcoholic beer), (iii) foods with added sugar, with total sugar content is at least 10g per 100g of product, other than powdered milk for newborns, infants, and young children (thus excluding cakes, biscuits, and bee food from the application of the reduced VAT rate), as well as (iv) dietary supplements.
• Water supply and sewage services;
• Supply of water for irrigation in agriculture;
• Supply of fertilizers and pesticides, as well as chemical fertilizers and chemical pesticides of the type normally used in agricultural production;
• Supply of schoolbooks, books, newspapers, and magazines, in physical and/or electronic format;
• Services allowing access to castles, museums, zoos, botanical gardens, etc.;
• Supply of firewood to individuals, legal entities, or other entities, regardless of their legal form of organization, including schools, hospitals, medical dispensaries, and social assistance units;
• Supply of thermal energy during the winter season;
• Supply of housing as part of social policy, namely the delivery of buildings and land intended to be used as nursing homes and orphanages, as well as rehabilitation and recovery centers for minors with disabilities;
• Accommodation within the hotel industry or similar industries, including the rental of land arranged for camping;
• Restaurant and catering services, excluding alcoholic beverages, as well as non-alcoholic beverages (juices, non-alcoholic beer).

The following operations that benefited from a reduced VAT rate will be subject to the 21% VAT rate:

• Supply and installation of photovoltaic panels, solar thermal panels, heat pumps, and other efficient heating systems intended for residential homes and buildings of central or local public administration, as well as the supply and installation of components for the repair and expansion of these systems and the supply of the mentioned systems as part of construction.
• Services allowing access to fairs, amusement parks, markets, exhibitions, cinemas, and cultural events, except for those exempt from VAT;
• Services allowing access to sports events;
• Supply of buildings, including the associated land, towards municipalities for rental to individuals or families with economic difficulties at subsidized rates. Until August 1, 2026, a reduced VAT rate of 9% applies to the delivery of these buildings to municipalities if legal documents for advance payment are concluded by August 1, 2025.
• Delivery of residential properties with a useful area of up to 120 square meters and a total value, including land, of up to RON 600,000 (VAT exclusive), purchased by individuals, either individually or jointly. From August 1, 2025, to July 31, 2026, it is possible to purchase a residential property with a reduced VAT rate of 9%, provided that the following criteria are cumulatively met: (i) the property has a useful area of up to 120 square meters, excluding outbuildings, and a value, including the land on which it is built, that does not exceed RON 600,000, VAT exclusive; (ii) the property must be delivered no later than July 31, 2026, and must be habitable at the time of delivery; (iii) the individual must not have purchased another property with a reduced VAT rate since January 1, 2023; (iv) a legal document for advance payment for the purchase of such a property must have been concluded by August 1, 2025; (v) for the legal documents for advance payment for the purchase of such a property concluded between July 03 – July 31, 2025, inclusively, proof shall be made that at least 20% of the property's value was paid as an advance by July 31, 2025.

For the following supplies of goods and services that previously benefited from VAT exemption, the standard VAT rate of 21% will apply:

• Services for the construction, rehabilitation, and modernization of hospital units, provided to nonprofit entities, if they are offered free of charge to hospital units in the public state network or intended for those owned by nonprofit entities;
• Services for the construction, rehabilitation, and modernization of hospital units, provided to companies fully owned by nonprofit entities;
• Supply of medical equipment, devices, accessories, and sanitary consumables intended for health care or for persons with disabilities, including essential goods for compensating disabilities, as well as adaptation, repair, rental, and leasing services provided to nonprofit entities.

Increase in excise duties rate

The excise duty level will have a gradual increase in two stages for a large part of the excisable products. Thus, starting with August 1, 2025, the excise duty level will increase on average by approximately 10% for several product categories, for example: gasoline and diesel, alcohol, beer, wines, non-alcoholic beverages with added sugar, and will increase again by approximately 10% from 2026.

The excise duty was also introduced for still wines and fermented beverages other than beer and wines, and in the case of non-harmonized excise duties, the excise duty level will increase for all product categories, for example:

Increase in dividend tax rate

• Starting with 2026, the dividend tax rate applicable to gross dividends distributed to both legal entities and individuals will increase from 10% to 16%.
• The new rate applies to dividends distributed starting with 1 January 2026, respectively starting with the first day of the modified tax year beginning in 2026.

For dividends distributed based on interim financial statements prepared for year 2025 (or for the modified fiscal year beginning in 2025), the 10% tax rate will continue to apply, without any subsequent adjustment following the finalization of the annual financial statements.

New rates for the supplementary tax on turnover applicable to credit institutions

• Amendments are introduced for taxpayers subject to the additional tax on turnover applicable to credit institutions.
• Credit institutions are subject to an additional tax on turnover in addition to the corporate income tax. The applicable tax rates for the additional tax on turnover will be amended as follows:
  • 2% for the period 1 January – 30 June 2025; and 4% for the period 1 July – 31 December 2025;
  • 4% from 1 January to 31 December 2026;
  • 2% applicable for credit institutions with a market share below 0.2% of the total net assets of the Romanian banking sector for the period 1 July 2025 – 31 December 2026.
• The 4% tax rate, effective as of 1 July 2025, will apply exclusively to turnover generated from that date onward.
• If there are any changes to the elements considered in calculating the turnover for the period 1 January – 30 June 2025, the taxpayer will be required to recalculate the tax by submitting a rectifying tax return.
• Accounting errors corrected through retained earnings will be considered for the calculation of the turnover related to the year for which the correction is done, and a rectifying tax return should be submitted for the respective year.

Income tax and social charges

Among the most notable modifications in the area of income tax and social charges are:

• Increase in the dividend income tax rate from 10% to 16%, applicable to dividends distributed starting January 1, 2026. For dividends distributed based on interim financial statements prepared during 2025, the 10% income tax rate remains applicable.
• Introduction of specific provisions for interest income derived from bonds issued by Romanian legal entities on foreign capital markets. In such cases, the individual taxpayer must declare the income through the annual tax return. These provisions apply to the income paid by the issuing company and registered in the taxpayer’s account starting August 1, 2025, regardless of the bonds’ issuance date.
• Deduction, for the assessment of the monthly taxable income from pensions, of the health insurance contribution (CASS) due, as applicable, starting with income for August 2025.
• Amendment of the minimum tax rate on gambling income from 3% to 4%, starting with income paid from August 2025.
• Income received—either in cash or in kind—from the sale of ferrous and non-ferrous metals and their alloys, originating from personal assets and classified as waste under the law, will no longer be considered non-taxable, but will be classified as taxable income under the category “income from other sources”, starting with income paid from August 2025.
• Certain categories of individuals will no longer be exempt from paying CASS, such as:
  • Spouses and parents without personal income, dependent on an insured individual;
  • Individuals persecuted for political reasons, deported abroad, or taken as prisoners, war veterans, and other similar categories as provided by law;
  • Individuals who are pensioners, for the portion of pension income exceeding RON 3,000 per month;
  • Individuals receiving unemployment benefits;
  • Individuals on childcare leave;
  • Individuals receiving social indemnities;
  • Monastic staff of recognized religious denominations.

Specific provisions are introduced regarding health insurance coverage for dependents, namely the spouse, and parents without personal income, who are dependent on an insured individual. The latter may choose to insure them by submitting an annual tax return and paying 25% of the CASS due at the time of filing the return through which the option is exercised, with the remaining 75% to be paid by May 25 of the year following the one in which the option was exercised. Similar provisions regarding the payment deadlines for the CASS are also introduced for individuals covered under Article 180, paragraph (2) of Law No. 227/2015 on the Fiscal Code, who opt to pay CASS during the year. These provisions apply to options exercised starting August 1, 2025.

Transitional measures are also introduced, such as:

• For individuals who opted to pay CASS under the provisions of Article 180, by July 31, 2025 (inclusive), the applicable payment deadline remains the one in force at the time the option was exercised, namely May 25, 2026.
• Individuals who are pensioners will be exempted from paying CASS on pension income earned starting January 1, 2028.

For more information, the EY team is at your disposal.