Romania raises VAT exemption threshold for small businesses, simplifies registration

Romania will increase the VAT exemption threshold for small enterprises to RON 395,000 (approximately EUR 78,000) from RON 300,000, starting September 1, 2025, the Finance Ministry announced following government approval of emergency legislation to amend the Tax Code.

The measure implements EU Directive 2020/285, which aims to harmonize taxation across Europe and reduce administrative burdens for small and medium-sized enterprises by providing a more flexible legal framework.

Under the new rules, Romanian small businesses with a turnover below the RON 395,000 threshold can benefit from special VAT regimes in other EU member states, provided their EU-wide turnover does not exceed EUR 100,000 and their operations in the requesting member state stay within local exemption limits.

"Through this ordinance, Romania continues aligning with European principles of fair competition by ensuring a digitalized, business-friendly fiscal framework in line with European standards," Finance Minister Alexandru Nazare said in a statement, as reported by News.ro.

The legislation also simplifies VAT registration processes.

Companies that exceeded the previous RON 300,000 threshold in August 2025 only need to register for VAT purposes if they surpass the new RON 395,000 ceiling. Businesses established before 2025 that registered for VAT due to exceeding the old threshold can request deregistration starting September 1, provided they did not exceed RON 300,000 in 2024 and have not surpassed RON 395,000 by their deregistration request date.

The changes also introduce new rules for taxing electronic services, making such services taxable where the client is established, has a permanent residence, or a usual residence, ensuring taxation occurs in the country of consumption.

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