Romania's 2025 tax reform: who wins and who loses?

A first package of tax changes, which has been recently enacted, mainly includes the measures listed below. Some of them are already in force starting 1 August 2025, while others will apply starting 1 January 2026.

• The dividend tax increases from 10 % to 16 % for dividends distributed starting 1 January 2026. However, for dividends distributed in 2025 based on interim financial statements prepared during the year, the 10 % tax rate remains in effect and will not be adjusted. This measure will mainly impact entrepreneurs and individual investors who are Romanian tax residents, as well as foreign individuals and entities residing in countries outside the EU or countries without a double taxation treaty with Romania.
• The standard VAT rate increases from 19 % to 21 %, while the reduced rates of 5 % and 9 % are unified into a single reduced rate of 11 %. Additionally, several goods and services that previously benefited from reduced or exempt VAT rates will now be subject to the standard rate. Examples include:
  • supply of dwellings under 120 m² and worth up to approx. EUR 120,000. Transitory measures exist for the period between 1 August 2025 and 31 July 2026, during which the delivery of such dwellings may still benefit from a 9 % reduced VAT rate under strict conditions. Social housing (e.g. buildings used as retirement or nursing homes), benefit from a reduced 11 % rate;
  • supply of food supplements, biscuits and traditional sweet bread ("cozonac") with more than 10g of sugar per 100g;
  • supply of veterinary medicinal products;
  • supply and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency heating systems for homes or for public authorities;
  • supply of services consisting in granting access to fairs, amusement parks, recreational parks, exhibitions, cinemas and cultural events (except those that are VAT-exempt), as well as access to sports events;
  • supply of services consisting in construction, rehabilitation or modernisation of public hospital units, and delivery of medical equipment to these units through NGOs.

These VAT changes start applying on 1 August 2025 and affect all companies in the supply chain. For consumers, they are expected to lead to further price increases.

• The existing additional tax for credit institutions – which was initially set for a reduction to 1 % in 2026 – increases from 2 % to 4 % of turnover starting 1 July 2025 and will also apply throughout 2026. An exception applies to credit institutions with a market share of less than 0.2 % of total net banking assets in Romania, which will continue to pay the additional tax at the 2 % rate.
• Harmonised excise duties on alcohol, tobacco and energy products (e.g. fuels) will be increased in two tranches starting  1 August 2025 and 1 January 2026. Additionally, certain products previously exempt from excise (such as still wines and cider) will become subject to excise duties similar to sparkling wines. Non-harmonised excise duties – such as those on sugary non-alcoholic beverages – will also increase in the same timeframe. These increases are typically passed on to the final consumer through higher prices.
• Other tax changes affecting individual taxpayers, applicable as of 1 August 2025:
  • the tax on gambling winnings increased from 3 % to 4 %;
  • income (in cash or in kind) earned from selling ferrous and non-ferrous metal waste from personal property became subject to personal income tax at a 10 % rate;
  • a 10 % health insurance contribution ("CASS") applies to the part of pensions exceeding EUR 600.

As mentioned, the package analysed above is just the beginning. The publication and implementation of the second and third packages of measures are planned to follow soon, which will complete the tax reform. These upcoming measures are expected to include measures tightening insolvency regulations, digitalisation of the tax administration ("ANAF"), combating tax evasion and increasing the collection capacity for local taxes.

The 2025 tax reform marks a key milestone in Romania's fiscal policy, with the declared goal of restoring budgetary balance. However, the real impact of these measures and, implicitly, the determination of who will gain or lose from them, can only be assessed in the period ahead, as the measures begin to take effect in practice.

author: Adriana Stoian