Increase in VAT exemption limit for small enterprises in Romania, along with streamlined business registration process
Romania has made significant changes to its Value Added Tax (VAT) regimes, aiming to create a more business-friendly environment and align with European principles of fair competition.
The Finance Minister, Alexandru Nazare, announced these changes, stating that the new ordinance would digitalize Romania's fiscal framework, making it in line with European standards. The changes, reported by News.ro, implement EU Directive 2020/285, which aims to harmonize taxation across Europe and reduce administrative burdens for small and medium-sized enterprises.
One of the key changes is the increase in the VAT exemption threshold for small enterprises in Romania. From September 1, 2025, the threshold will rise from RON 300,000 to RON 395,000. This means that Romanian small businesses with an annual turnover below RON 395,000 will benefit from the new tax exemption threshold. This primarily includes micro and small enterprises that currently fall under this income level.
Businesses established before 2025 that registered for VAT due to exceeding the old threshold can request deregistration starting September 1, 2025, provided they did not exceed RON 300,000 in 2024 and have not surpassed RON 395,000 by their deregistration request date. Companies that exceeded the previous RON 300,000 threshold in August 2025 only need to register for VAT purposes if they surpass the new RON 395,000 ceiling.
The changes also introduce new rules for taxing electronic services. These services will now be taxed where the client is established, has a permanent residence, or a usual residence. This shift in taxation is known as taxation of electronic services occurring in the country of consumption.
In addition, the legislation simplifies VAT registration processes, making it easier for businesses to navigate the complexities of VAT in Romania. These changes are a result of the government's approval of emergency legislation to amend the Tax Code.
Small businesses in Romania, particularly those with an annual turnover below RON 395,000, will find these changes beneficial. As long as their EU-wide turnover does not exceed EUR 100,000 and their operations in the requesting member state stay within local exemption limits, they can also benefit from special VAT regimes in other EU member states. These changes are expected to foster a more competitive and business-friendly environment in Romania.
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