Guide to VAT rates in Romania: What you need to know

The year 2024 has brought significant changes to VAT regulations in Romania, which have a substantial impact on e-commerce businesses operating in this market. The Romanian government has introduced changes to VAT rates affecting a wide range of goods and services. These changes include both increases and decreases in VAT on selected products and services, which can directly affect business operating costs and the prices offered to consumers.

Standard VAT rate in Romania

The standard VAT rate in Romania is 19% and applies to most goods and services available on the market. In 2024, this rate remains unchanged and covers a broad range of products and services that do not qualify for reduced VAT rates. For e-commerce sellers, this means that all goods and services not included under lower rate regulations will be taxed at the standard 19% rate.

Reduced VAT rate of 9%

The 9% VAT rate in Romania covers a wide range of goods and services that are crucial for the daily lives of consumers. This includes primarily food, pharmaceuticals, catering and restaurant services, as well as accommodation. Additionally, this rate applies to the supply of drinking water and water for agricultural use, which is important for the agricultural sector. Marketing services related to the promotion of food and beverages, including those for animals, also benefit from this reduced rate, as do food production equipment and prosthetics and medical equipment for disabled individuals.

Increase from 9% to 19% VAT rate
Some goods that were previously taxed at 9% are subject to the standard 19% VAT rate from 2024 onwards. An example of this is products with added sugar content exceeding 10g per 100g, excluding cookies and biscuits. Non-alcoholic beer is also subject to the increased VAT rate.

Reduced VAT rate of 5%

The 5% reduced VAT rate in Romania applies to specific categories of products and services that support the country’s cultural, sporting, and environmental development. This includes services related to amusement and recreational parks, which promote active leisure. The rate also covers organic and regional food, encouraging healthy eating habits and supporting local agriculture. Furthermore, 5% VAT is charged on selected recreational transport services, such as ski lifts and boat rides, as well as heating for private households, hospitals, churches, and public institutions. This rate also applies to the rental of sports and cultural facilities, as well as the sale of school textbooks, books, newspapers, and firewood, which enjoys reduced taxation at least until 2029.

Increase from 5% to 19% VAT rate

The most significant change affects products and services previously taxed at the reduced 5% VAT rate, which from January 2024 are now taxed at 19%. This includes the use of sports facilities for certain classified activities, unless they are VAT-exempt, as well as passenger transport by trains or vintage vehicles for tourism and entertainment purposes.

VAT registration in Romania

E-commerce sellers planning to expand their operations into the Romanian market must be aware of the obligation to register for VAT in Romania in three key situations.

The first pertains to businesses storing goods within Romania, which may involve using their own warehouses or fulfillment services provided by Romanian companies. In such cases, VAT must be accounted for in Romania.

The second situation arises when the total value of sales to European Union countries, including Romania, exceeds EUR 10,000 under the EU Distance Selling threshold. In this case, an e-commerce company may choose whether to account for VAT in Romania or use the VAT OSS (One-Stop Shop) procedure, which simplifies VAT accounting across the European Union.

The third situation occurs when goods imported from outside the European Union are brought directly into Romania. In this scenario, VAT registration in Romania is also required to ensure proper VAT accounting on the import.

VAT compliance obligations

Companies that have registered for VAT in Romania must adhere to deadlines for submitting returns and paying the tax. VAT must be accounted for by the 25th day of the month following the reporting period. VAT returns can be filed monthly, but businesses that did not exceed EUR 100,000 in turnover in the previous year may opt to file quarterly.

VAT registration in Romania requires submitting a complete set of documents, including proof of VAT registration in another EU country, documents confirming readiness to conduct business in Romania, an extract from the national trade register, and the company’s articles of association. The registration process can take up to 1.5 months.

Potential penalties for non-compliance

E-commerce sellers must be aware that delays in filing VAT returns, inaccurate declarations, or late payments can result in penalties. In Romania, these penalties can reach up to 5,000 RON, which is a significant cost that should be factored into business planning.

Intrastat in Romania

In addition to VAT obligations, some companies may be required to submit Intrastat reports. This obligation applies to businesses whose import or export of goods between EU countries exceeds 1 million RON. Intrastat reports include information on the flow of goods between EU countries, as well as the movement of goods between warehouses in different countries.

Summary

The changes in VAT rates in Romania, effective January 1, 2024, directly impact e-commerce businesses. The increases and decreases in VAT on selected goods and services require sellers to adjust their pricing strategies and consider the new rates in cost and margin calculations. Additionally, entrepreneurs must be mindful of registration and reporting obligations, which are an integral part of doing business in the Romanian market. Proper tax management in Romania can significantly affect the operational success of an e-commerce company, making it important to stay informed of regulatory changes and ensure timely and accurate compliance.