Significant fiscal reforms are now in effect across Romania, ushering in a new era of economic adjustments that are poised to impact citizens and businesses alike. These comprehensive measures, designed to reshape the national budget, introduce widespread price increases and new taxation schemes that will undoubtedly influence daily expenditures and overall financial planning for households nationwide.
A cornerstone of these reforms is the considerable increase in the Value Added Tax (VAT) from 19% to 21% on a broad spectrum of products and services. Consumers will inevitably face a ripple effect of higher prices, extending across essential goods such as food items not classified as basic, clothing, footwear, and critical services including electricity, telecommunications, public transport, and even medicines. This VAT increase is expected to be a primary driver of the escalating cost of living, directly affecting the purchasing power of the populace.
Beyond the VAT adjustments, the new fiscal policy also encompasses significant increases in various Excise Duties. Products like tobacco, alcoholic beverages, sugary items, and fuels will see their excise taxes rise, contributing further to a general uptick in market prices. This cascading effect will be felt throughout the entire supply chain, from producers and distributors to retailers, ultimately transferring the additional burden onto the end consumers and potentially dampening overall economic activity.
The legislative changes extend into social security, particularly impacting pension beneficiaries and those receiving various state allowances. Pensions exceeding a monthly threshold of 3,000 lei will now be subject to a 10% contribution to health insurance. Furthermore, the categories of taxpayers contributing to social health insurance have been expanded to include individuals on parental leave, while certain historical exemptions for politically persecuted persons and war veterans have been repealed, though critical groups like those with oncological diseases and pregnant women retain their insured status.
In the realm of property and healthcare, specific VAT applications have been revised. The delivery of photovoltaic panels, solar panels, and heat pumps will now be subject to the 21% VAT rate. Similarly, the VAT exemption for certain construction, rehabilitation, and modernization services benefiting non-profit hospitals, along with specific medical equipment, has been rescinded. Transitional measures are in place for existing agreements on social housing, but new purchases after August 1, 2025, will largely face the higher VAT rate, marking a notable shift in the housing market dynamics.
The business and investment landscape also experiences pivotal changes under these new fiscal regulations. The tax on dividend income is slated to increase to 16% for distributions made after January 1, 2026. Additionally, a new framework for taxing interest on bonds issued by Romanian legal entities has been introduced, shifting the declaration responsibility to individual taxpayers. These adjustments aim to streamline tax collection while potentially influencing investment strategies and corporate financial planning in the coming years.
The leisure and entertainment sectors are not exempt from these sweeping reforms. The gambling industry, for instance, faces a progressive taxation model on winnings, with rates escalating based on the accumulated daily amounts. Operators will also contend with increased taxes for each gaming machine. Moreover, services providing access to sporting events, fairs, recreational parks, and cinemas, which previously benefited from reduced VAT rates, will now be subject to the standard 21% VAT, potentially increasing the cost of leisure activities for the public.
Overall, these comprehensive fiscal measures signify a substantial restructuring of the nation’s economic and social framework. With widespread implications ranging from daily household budgets and consumer spending habits to corporate investment and social welfare provisions, understanding these new regulations is crucial for all stakeholders. The coming months will reveal the full extent of their impact on the economy and the lives of citizens as the country adapts to this new financial paradigm.
