Value Added Tax (VAT) in Romania is a vital part of the country’s tax system, applied to a broad range of goods and services. VAT is a consumption tax that contributes to the government’s revenue and supports public services. Romania’s VAT system includes a standard rate, reduced rates for certain goods and services, and exemptions to cater to various sectors.
VAT Rates in Romania
Romania’s VAT system features the following rates:
| VAT Rate | Percentage | Description |
|---|---|---|
| Standard Rate | 19% | Applies to most goods and services, ensuring a broad tax base and significant revenue for the government. |
| Reduced Rate | 9% | Applied to specific goods and services, such as foodstuffs, certain medicines, and hotel accommodation. |
| Second Reduced Rate | 5% | Used for particular items, including certain social and cultural services. |
| Zero Rate | 0% | Applies to exports and international transport services to maintain competitiveness in global markets. |
| Exemptions | – | Includes financial services, insurance, and specific medical and educational services. |
Notes:
- Standard Rate (19%): The general VAT rate applied to most transactions in Romania.
- Reduced Rate (9%): Targets essential items such as food and certain medical products to make them more affordable.
- Second Reduced Rate (5%): Focuses on specific social and cultural services to support accessibility in these areas.
- Zero Rate (0%): Ensures that exports and international transport services are not subject to VAT, supporting Romania’s competitive position in international trade.
- Exemptions: Cover sectors like financial services, insurance, and specific medical and educational services to reduce the tax impact on these critical areas.
Purpose and Impact
The VAT system in Romania is designed to:
- Generate substantial revenue to fund public services and infrastructure development.
- Provide financial relief for essential and cultural goods and services through reduced VAT rates.
- Facilitate international trade by applying the zero rate to exports and international transport services, helping Romanian businesses remain competitive globally.
Understanding VAT in Romania is essential for businesses and consumers to navigate the tax system effectively and ensure compliance with Romanian tax regulations.