Increase in VAT, excise duties and expansion of health contribution taxpayer base as of August

The increase in VAT and excise duties and the expansion of the taxpayer base with regard to health contributions are the main fiscal changes that shall come into force as of August 1.

Thus, the first fiscal package (Law No.141/2025) adopted under the Government's responsibility stipulates an increase in the standard VAT rate from 19pct to 21pct and only one reduced rate of 11pct, compared to the current two rates of 5pct and 9pct.

According to a report published by PwC, the reduced VAT rate increases from 9pct to 11pct for the following supplies of goods/services: the supply of medicines for human use; delivery of food, including beverages, intended for human and animal consumption, live animals and birds of domestic species, whose Combined Nomenclature (CN) codes are established by methodological norms, with the exception of alcoholic beverages, non-alcoholic beverages falling under CN 2202, foods with added sugar, whose total sugar content is at least 10 g/100 g of product, other than formula for newborns, infants, and young children, and food supplements defined by Law No.56/2021. The same 11pct VAT will apply to water supply and sewerage services, the supply of water for agricultural irrigation, the supply of fertilizers and pesticides for agriculture, including chemical ones, seeds and other agricultural products intended for sowing or planting, as well as services of the type normally used in agricultural production, as stipulated through the joint order of the Finance Minister and the Minister of Agriculture and Rural Development.

On the other hand, VAT is increased to the standard rate of 21pct, from 9pct previously, for the supply of veterinary medicines and the supply of plants and ingredients used in food preparation, seeds, and bee food.

The same 21pct VAT rate will also apply to the delivery of housings with a maximum usable area of 120 square meters and a value not exceeding 600,000 lei. In this context, PwC consultants explained that, between August 1, 2025, and July 31, 2026, the reduced rate of 9pct may be maintained for the delivery of housing that meet these characteristics, provided that the following conditions are met: the contract must be valid until August 1, 2025, and provide for a down payment (for contracts concluded between July 3 and July 31, 2025, this down payment must be 20pct); the housing must be delivered by July 31, 2026, and be ready for occupancy; the person must not have purchased another home with a reduced rate since January 1, 2023.

Harmonised excise duties will increase in two stages

Harmonised excise duties will increase in two stages, as follows: for alcohol and alcoholic beverages, by 10pct from August 1, 2025, and by 10pct from January 1, 2026, for manufactured tobacco, by 3pct from August 1, 2025, and by 3pct, respectively, from January 1, 2026, and for gasoline and diesel, by 10pct from August 1, 2025, and by 10pct from January 1, 2026. The excise duty rate for gasoline and diesel fuel enforceable in 2026 will no longer be updated with the consumer price index, PwC mentioned.

The specific excise duty on cigarettes shall increase to 576.36 lei/1,000 cigarettes for the period August 1, 2025 - March 31, 2026, a 3pct increase over the initial increase that had already taken place on April 1, 2025.

CASS (health insurance contribution) for pensions over 3.000 lei

For pensioners, there's now a requirement to pay a 10pct health insurance contribution on pension income that's more than 3.000 lei per month for each pension entitlement. The measure applies to income between August 1, 2025, and December 31, 2027.

Moreover, a number of insured persons will pay health contributions, such as: spouses and parents without their own income who are dependent on an insured person; persons receiving unemployment benefits or, where applicable, other social protection rights granted from the unemployment insurance budget; persons on accommodation leave and those on parental leave; individuals receiving social assistance; monastic personnel of recognized religions.

On the other hand, individuals are now required to calculate, declare through a single tax return, and pay tax on interest earned on bonds issued by companies and legal entities resident in Romania on capital markets outside Romania. The measure is enforced to income paid by the issuing company and recorded in the accounts of individuals starting on August 1, 2025, regardless of the date of issue of the bonds.