Increase in VAT exemption limit for small Romanian businesses and streamlining of registration process
The Romanian government has announced significant changes to its fiscal framework, aimed at making it more business-friendly and in line with European standards. According to the Finance Minister, Alexandru Nazare, these adjustments are a continuation of efforts to align with European principles of fair competition.
One of the key changes is the increase in the Value-Added Tax (VAT) exemption threshold for small enterprises. Starting September 1, 2025, the threshold will rise from RON 300,000 to RON 395,000. This means that more small businesses will be exempt from paying VAT, providing them with a much-needed financial relief.
The adjustment implements EU Directive 2020/285, which aims to harmonize taxation across Europe and reduce administrative burdens for small and medium-sized enterprises. The directive also introduces new rules for taxing electronic services, making such services taxable where the client is established, has a permanent residence, or a usual residence.
In addition to the increased VAT exemption threshold, the VAT registration processes have been simplified. This simplification is expected to further ease the burden on small enterprises, making it easier for them to comply with tax regulations.
The changes are a result of the approval of emergency legislation to amend the Tax Code by the Romanian government. The current Finance Minister, Alexandru Nazare, who presented the law amending the tax code to implement EU Directive 2020/285, belongs to the PNL party and is part of the Bolojan cabinet since June 23, 2025.
Businesses established before 2025 that registered for VAT due to exceeding the old threshold can request deregistration starting September 1, provided they did not exceed RON 300,000 in 2024 and have not surpassed RON 395,000 by their deregistration request date. However, the operations in the requesting member state must stay within local exemption limits for these businesses to benefit from special VAT regimes. Moreover, the EU-wide turnover for these businesses must not exceed EUR 100,000.
For businesses that exceed the new RON 395,000 threshold in August 2025, they will only need to register for VAT purposes if they surpass the new ceiling. Companies that continue to operate below this threshold will remain exempt from VAT, as per the new regulations.
These changes are expected to take effect on September 1, 2025. The digitalization of the fiscal framework in Romania, in line with European standards, is expected to bring about a more efficient and streamlined tax system, benefiting both businesses and the government.
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