Tax news from September 1, 2025: Increased VAT ceiling and new rules for small businesses in Romania and the EU

The Romanian government has published a draft Emergency Ordinance that makes significant changes to the Fiscal Code (Law No. 227/2015), particularly with regard to the special VAT exemption regime for small businesses. These changes will come into force on September 1, 2025, and are part of the process of alignment with European Union legislation, in accordance with Directive (EU) 2020/285. Below, we present the main aspects that will bring changes to the Fiscal Code:

1. Increase in the ceiling for the special VAT exemption scheme

One of the most important changes is the increase in the turnover threshold for applying the special VAT exemption regime, which will rise from RON 300,000 to RON 395,000 (equivalent to approximately EUR 88,000).
Taxable persons exceeding the new threshold will be required to register for VAT purposes and apply the normal taxation regime from the date of exceeding the threshold.
It is important to note that the exemption regime is optional, and companies may opt for the normal taxation regime even if they are below the threshold. At the same time, deliveries of tangible fixed assets and the assignment/transfer of tangible assets will no longer be included in the VAT turnover.

2. Obligations when exceeding the ceiling

If turnover exceeds the threshold of RON 395,000:
-The company is required to apply for VAT registration no later than the date on which the threshold is exceeded.
-VAT applies from the transaction that led to the threshold being exceeded.
-The normal taxation regime may be applied retroactively for transactions on the same day.
In case of non-compliance with the registration obligation, the tax authorities may automatically register the taxable person on the date the threshold is exceeded, determining payment obligations and/or deductible amounts corresponding to the period during which the exemption regime was applied unlawfully.

3. The exemption regime extends across borders within the EU

Two new articles have been introduced: 310¹ and 310², which regulate the application of the exemption between EU Member States.
Article 310¹, concerning Romanian companies that apply the exemption regime in other EU countries, if their EU-wide turnover is below EUR 100,000 and if they do not exceed the exemption threshold in the respective country.
Article 310², concerning companies from other Member States that apply the exemption in Romania, if the EU-wide turnover is below EUR 100,000 and the value of operations in Romania does not exceed RON 395,000.

4. Technical changes regarding VAT on transactions and services

-Clarification of the place of supply of cultural, educational, and entertainment services (physical vs. online).
-Detailed description of situations in which VAT is payable by the beneficiary, especially in the case of foreign companies not registered in Romania.
– VAT adjustment in the event of a change in the tax regime, such as the transition from exemption to the normal regime or vice versa.

5.Transitional provisions August–September 2025

– Taxable persons exceeding the threshold of RON 300,000 in August 2025 are not required to register for VAT purposes unless they also exceed the new threshold of RON 395,000.
– If the threshold of 395,000 lei is exceeded in August, registration for VAT purposes must be completed by September 10, 2025.
Companies that registered for VAT purposes prior to September 1, 2025, but did not exceed the threshold of 395,000 lei, may request to be removed from the register and return to the exemption regime.

The ordinance will enter into force on September 1, 2025, and ANAF has 30 days to issue the necessary methodological rules. The transposition is based on Directive (EU) 2020/285 and Directive (EU) 2022/542.
In conclusion, these changes bring Romania into line with European directives and offer more flexibility to small businesses, including those operating across borders in the EU. It is important for the companies concerned to assess their turnover and decide whether they wish to apply the exemption regime or remain under the normal VAT regime.