The Romanian Senate has received a legislative proposal on Junes 27, 2019, which states the intention to reduce the standard VAT rate in 2020 (1), which by the way, would be the lowest rate in the EU.

If the Senate approves the measure, from January 1, 2020, the standard VAT rate would be reduced from its current 19% to 16%. This means that Romania would have the lowest rate in all the EU zone, even below Luxembourg’s VAT rate of 17% (2).

According to the latest report from the European Commission which shows the evolution of the VAT Gap in all EU member states from 2012 to 2016, Romania ranked last on all those years (3). Therefore, this measure of lowering VAT rate to 16% aims to improve VAT compliance rates and collection. In addition, a 5% low rate for food would also be introduced.

If you think this developments would affect your business, please do not hesitate to contact us.