Tax Flash nr. 121

Changes regarding the rate of the value-added tax – GEO 602/2025

Dear partners,

On Friday 25th of July, in the Official Gazette was published among other fiscal amendments in Romania, a last-minute increase of the VAT rates.
Law 141/2025 brings in effect from the 1st August 1 2025 the following aspects, that might be relevant for your activity in Romania:

  • Increase of the standard rate from 19% to 21%;
  • Elimination of the reduced rates of 5% and 9%;
  • Introduction of a single reduced rate of 11% for a narrower range of goods and services among those for which the two reduced rates currently apply (9% and 5%, respectively);
We mention that in the Official Gazette no. 715 of July 31, 2025, Government Decision no. 602/2025 was published for the update of the Methodological Norms for the application of the Fiscal Code, taking into account these amendments.
We have presented below a few general guidelines regarding this increase in the VAT rate. However, please do not hesitate to contact us if you have any questions regarding the operations performed by your company in Romania.
  • The basic principle in applying VAT rates in invoicing
The applicable VAT rate is always the one in force at the time when the goods are delivered or the services are provided. Therefore, at the time when the actual delivery of the goods or the full provision of the services takes place, respectively when the buyer acquires the right to use them as owner.
The date of issue of the invoice is not necessarily decisive for the applicable VAT rate. Therefore, even if an invoice is issued after August 1, 2025, it may mention the old rates, if the actual supply took place before this date. Moreover, in case the supply is performed after 1st of August 2025 and the invoice was issued prior this date, the invoice needs to be reissued with the new VAT rate.
  • Downpayment invoices (partial or full payments)
Regardless of whether a downpayment invoice (or an advance receipt) is issued before 1st of August 1 2025 at the old rate, and the supply is performed after  1st of August 1 2025, VAT regularization is mandatory. This rule applies regardless of whether the advance was made partially or in full.
The final invoice, issued in August, will include the full value of the delivery/service with the new VAT rate (21% or 11%). Simultaneously, the advance initially invoiced will be reversed, using the old VAT rate (19% or 9%).
Example 1: (full value): an invoice of 1,000 lei + 190 lei VAT (19%) issued in July. The delivery takes place in August. A new invoice is issued for 1,000 lei + 210 lei VAT (21%), to which a reversal of 1,000 lei + 190 lei VAT (19%) is added. The final invoice will have a total of 20 lei (VAT difference).

Example 2: (partial value): a delivery of 3,000 lei + VAT. In July, a partial invoice of 1,000 lei + 190 lei VAT (19%) is issued. The supply is performed in August. A new invoice is issued for 3,000 lei + 630 lei VAT (21%) and a reversal of 1,000 lei + 190 lei VAT (19%).
  • Refusals, returns, and subsequent discounts
Adjustments to the taxable base, such as refusals, returns of goods or discounts granted after invoicing, shall have the same VAT rate that was applied for the initial transaction, regardless of the date on which the adjustment occurs. For example, a return for a July sale with 19% VAT will be reversed with 19% VAT, even if the return is processed in August.
  • Intra-Community acquisitions
For intra-Community acquisitions already carried out prior to August 1, 2025, applying a certain VAT rate (for example, 19%), no adjustment is necessary as a result of the legislative change. These transactions remain fiscally treated at the rate applicable at the time they were carried out.
  • Service provisions with successive settlements or payments
For services involving successive settlements or payments (e.g., construction-assembly, consultancy, research, expertise, or other similar services), the moment considered as the date of service provision is when the work situations, work reports, or other similar documents are issued, based on which the services performed are established.
Alternatively, if contractual provisions exist in this regard, the date of acceptance of the services by the beneficiary may be considered the relevant moment for applying the VAT rate.
Thus, if the corresponding document (e.g., work situation) is issued before August 1, 2025, the VAT rate in force at that time will apply. On the other hand, if it is issued after August 1 (it is considered that the service provision takes place after August 1, 2025), the new VAT rate of 21% or 11% will apply.
  • Deliveries and service provisions of a continuous nature

For deliveries of goods and provisions of services of a continuous nature such as supplies of natural gas, water, electricity, as well as telephone services, rental, leasing, concession, land lease, or other real rights over immovable property (e.g., usufruct, superficies), the service is considered performed on each date provided in the contract for the payment of the service or, in the absence of such a contractual provision, the relevant date is the date of invoice issuance, with the mention that the settlement period may not exceed one year.
Thus, if the date provided in the contract for the payment of the service or the date of invoice issuance is prior to August 1, 2025, the VAT rate in force at that time will apply. On the other hand, if the invoice is issued after August 1, 2025, in accordance with the contractual provisions, the new standard rate of 21% or, where applicable, the reduced rate of 11% will apply.