Prices increased from August 1; VAT 21%, excise duties increased, pensions over 3000 lei taxed at CASS

The first package of fiscal measures comes into force today, the impact of the VAT increase from 19 to 21% being the greatest on consumers, who will face price increases in the chain, both for food products that are not part of the 14 cataloged by the Government as basic, as well as for clothing, footwear, electricity, mobile, landline, internet services, public transport, medicines, etc. The cascading increase in VAT to 21% for most products will be felt in the pockets of citizens, especially since the salaries of public sector employees are frozen, and some will even be reduced by eliminating some bonuses, and for the difference that exceeds the ceiling of 3000 lei in pensions, elderly people will have to pay a 10% contribution to health insurance. In addition to the VAT increase, citizens will also have to bear the increase in the prices of other products, if we take into account that all excise duties are also increased from today - on tobacco, alcohol, on products containing sugar, on fuels, etc. -, an increase that will be reflected on the entire chain from the producer to the distributor, to the sellers and to the customers, which will have a negative effect on the purchasing power of citizens.

But what are the tax changes that come into force today, based on the law assumed in Parliament by the Bolojan government, which passed the filter of the Constitutional Court and was promulgated by President Nicuşor Dan?

First of all, the increase in VAT from 19% to 21% for most products and the repeal of some exemptions or reduced VAT rates for some deliveries of goods or services, as follows:

- the delivery of photovoltaic panels, solar panels or heat pumps will be invoiced with a VAT rate of 21%;

- the VAT exemption, with the right to reimbursement, for construction, rehabilitation, modernization services benefiting non-profit entities that own and operate their own hospitals is repealed

- the VAT exemption for the delivery of medical equipment, devices, accessories and medical protection equipment and consumables granted through VAT reimbursement is repealed when the beneficiaries are non-profit entities that operate their own hospitals. It should be noted that there are transitional measures that non-profit entities will follow for purchases made until August 1, 2025. These entities retain their right to VAT reimbursement provided that an application is submitted no later than October 31, 2025. The government also decided to maintain the VAT exemption for the delivery of prostheses and their accessories, including the delivery of dental prostheses, as well as for the delivery of orthopedic products.

- the following services, which have so far benefited from a low VAT rate, will be invoiced with a VAT rate of 21%: delivery of veterinary medicines; installation or repair of photovoltaic panels, heat pumps and solar panels; access to sporting events; access to fairs, recreational parks, sports halls, fairs, exhibitions and cinemas. Any other delivery of goods or services for which the legislator no longer expressly refers and which are not included in the VAT-exempt categories, falls within the scope of the 21% VAT rate.

- in the field of delivery of social housing, the tax package adopted by Law no. 141/2025 repeals, as of August 1, 2025, the delivery to a natural person of a social housing with a reduced VAT rate. We refer to those social housing units sold to an individual when they met the conditions to be habitable as such, the useful area is less than 120 square meters and the price value, excluding VAT, is less than 600,000 lei. After August 1, 2025, the sale of any housing unit to individuals that meet the condition of being new, from a VAT perspective, will be invoiced with a VAT rate of 21%. The legislator brings a transitional measure with the possibility of applying the reduced VAT rate of 9% until July 31, 2026 for those deliveries of social housing units for which payment promises/pre-contracts are signed and are in progress until August 1, 2025. However, in order for this transitional measure to be applied, several conditions must be met: a contract is signed between the parties no later than July 31, 2025 regarding the acquisition of a social housing unit by one or more individuals; the buyer has paid the seller a down payment of at least 20% of the value of the home paid no later than July 31, 2025; the buyer has not purchased a social housing with a reduced VAT rate after January 1, 2023, a situation resulting from the analysis of the register of purchases of social housing with a reduced VAT rate kept by the tax authority. The notary public, in front of whom the documents are signed, is obliged to verify this situation in the register; an individual has the right to buy a single social housing unit with a reduced VAT rate.

We note that starting today, the fiscal concept of social housing for which the reduced VAT rate of 11% applies represents: the delivery of buildings, including the land on which they are built, intended to be used as nursing homes and pensioners' homes; the delivery of buildings, including the land on which they are built, intended to be used as children's homes and recovery and rehabilitation centers for disabled minors.

• Higher excise taxes mean higher prices

Starting today, the value of excise taxes increases. For example, beer produced by large producers has an excise tax of 5.30 lei compared to 4.82 lei for each Plato degree, while beer produced by small producers has an excise tax of 2.92 lei compared to 2.65 lei previously for each Plato degree. At the same time, for the first time in our country, the excise tax on still wine is being introduced, an excise tax set at 10 lei per hectoliter of product. It is not specified whether the excise tax will be paid only by economic operators or will also be paid by households that own vines.

Other excise taxes that come into force today are: sparkling wines - 76.19 lei (from 69.26 lei) for each hectoliter of product; ethyl alcohol - increase to 5,316.81 lei from 4,833.46 lei for each hectoliter of pure alcohol; unleaded gasoline - increase to 2,781.64 lei compared to 2,528.76 lei per 1,000 liters; diesel - increase to 2,549.35 lei compared to 2,317.59 lei per 1,000 liters; cigarettes - increase to 703.47 lei from 672.92 lei for 1,000 cigarettes, with the mention that the specific excise tax on cigarettes is kept at the level of 576.36 lei for 1,000 cigarettes for the period August 1, 2025 - March 31, 2026. additionally, an ad-valorem excise tax of 10% of the retail price will be added.

• Pensions over 3,000 lei taxed with CASS

Regarding health, the new law that enters into force today established the decrease in the percentage of the allowance for sick leave, the expansion of the categories of taxpayers who pay health contributions, including people on parental leave.

As for the sick leave allowance, it will be 55% of the calculation base for sick leave certificates issued for a period of up to 7 days, 65% for sick leave certificates issued for a period of between 8 and 14 days and 75% for sick leave certificates exceeding 15 days. The gross monthly amount of the allowance for temporary incapacity for work for cardiovascular diseases is determined by applying the percentage of 75% to the calculation base.

At the same time, the status of insured person in the public health system for politically persecuted persons, war veterans and widows, deported persons, anti-communist fighters, etc. is repealed. Persons with oncological diseases retain their status of insured person in the public health system. Also, pregnant women and lactating mothers retain their status of insured person in the public health system. The right of the spouse or parents without income who are dependent on them to be insured in the public health system solely on the basis of the kinship relationship with the insured person is repealed.

Persons who obtain income from pensions are contributors to the social health insurance system and pay the social health insurance contribution for the amount exceeding a monthly ceiling of 3,000 lei. Also, a contribution to social health insurance will be paid for income obtained as: unemployment benefit; allowance for raising a child up to 2 years of age; inclusion aid and family aid.

Individuals who are employees or obtain income from pensions do not owe a contribution to social health insurance for income from intellectual property rights.

The normative act introduces as of today a distinct insurance procedure by option for dependent persons. Thus, the husband, wife or parents of the insured person can opt for the payment of the social health insurance contribution through the insured person. The calculation basis for the health contribution will be six guaranteed minimum gross salaries. As a procedure, a single insurance declaration will be submitted, and the option can be exercised at any time within the calendar year, the health contribution being paid as follows: 25% at the time of submitting the insurance declaration; 75% by May 25 of the following year.

• Tax increases

The regulatory act that enters into force today provides for several structural changes regarding the personal income tax. Thus, the tax on dividend income is increased to 16% for dividends distributed after January 1, 2026. The Government mentioned that for dividends distributed in 2025 based on interim financial statements, the dividend tax will not be recalculated when the distributable dividends are regularized according to the annual financial statements.

Another measure is represented by the introduction of an exemption to the procedure for taxing interest on bonds issued by legal entities resident in Romania. The tax is no longer withheld at source, although it remains at 10%, but is declared by the individual taxpayer through the single declaration.

When determining the tax on pension income, the contribution to social health insurance, when due, becomes a non-taxable/deductible amount in addition to the non-taxable income of 3,000 lei.

Taxes are also increasing in the gambling industry. Thus, gambling income is taxed progressively, by withholding at source, with rates of 10%, 20% and 40% depending on the value of the accumulated daily winnings. In addition, the Government has increased the taxes that operators pay for each machine in gambling halls.

Also today, amendments to the legislation on advance pricing agreements enter into force. It is known that transactions between affiliated taxpayers must comply with the principle of market prices, transfer prices. In this regard, tax authorities may request the transfer pricing file, of course, under the terms of the law. As a tax protection measure, a taxpayer may request an advance pricing agreement obtained directly from the tax authority, opposable to inspection teams, which justifies the use of market prices between affiliated taxpayers. The new amendments that enter into force today improve the legislation on advance pricing agreements, from the perspective of amicable collaboration between tax authorities in Romania and tax authorities in other states with which Romania has signed double taxation avoidance conventions or other tax agreements. Thus, if an economic operator who has requested and obtained an advance pricing agreement for the current or future period, may request the extension of the advance pricing agreement also for transactions carried out in the previous period up to 5 fiscal years concluded prior to the one in which the request was submitted. If there is an ongoing inspection and the extension of an advance pricing agreement is requested, the tax inspection may be suspended.