The VAT exemption threshold and the VAT rates, from 1993 to today

The exemption threshold: from 2 billion old lei to RON 395,000

The "special exemption scheme for small enterprises" — today article 310 of the Fiscal Code — is the threshold below which a taxable person may choose not to register for VAT. They do not charge VAT, but they do not deduct it either.

The history of this threshold has a particularity that explains many entrepreneurs' complaints: between 2007 and 2025, its value in lei was frozen at the exchange rate on the date Romania joined the European Union, 3.3817 lei/euro. That is, the RON 300,000 threshold in force until 2025 meant, on paper, €88,500 — but, at the day's actual exchange rate, considerably less. Only Government Ordinance 22/2025 broke this anchoring.

The timeline of the thresholds

What is today's threshold really worth?

The figure of RON 395,000 is presented as the equivalent of €85,000 — the maximum threshold allowed by Directive (EU) 2020/285. This is, however, a historical value, calculated at the European Central Bank's rate of 18 January 2018, roughly 4.64 lei/euro.

At the National Bank's rate of 20 August 2026, €1 = 5.2535 lei, those RON 395,000 are actually worth approximately €75,200. In other words, the threshold that came into force just a year ago is already, in currency terms, below the European ceiling that produced it — and noticeably below the nominal €88,500 of the previous threshold. The phenomenon is not new: it is exactly the mechanism that eroded the RON 300,000 threshold for seven years.

The standard rate: six changes in thirty-three years

Throughout its history, the standard rate has followed a single logic: it rises when the budget needs money fast, and it falls when economic growth seems to allow it. The two major increases — 2010 and 2025 — were decided in almost identical contexts: a deficit out of control, external pressure, a decision taken within days.

Reduced rates: from a public-policy tool to a single figure

Between 2008 and 2025, Romania had three rates in parallel — standard, 9% and 5% — plus exemptions with a right of deduction that function, economically, as a zero rate. The list of goods and services at the reduced rate grew longer year after year: food, HoReCa, housing, books, solar panels, firewood, thermal energy, fertilisers.

Law 141/2025 reversed the direction. From 1 August 2025, the 5% and 9% rates were merged into a single 11% rate, and a significant share of categories were removed from the reduced regime entirely and moved to 21%.

Which rate applied, to what, and when

The chart below is the complete map of reduced rates by category, from 2004 to the end of 2026. Each band is a period of application; the colour and the figure give the rate. Use the filters to isolate a category or a domain.

A few threads worth reading separately

HoReCa is the category with the most changes: standard rate until 2015, then 9%, then 5% from November 2018, back to 9% from 2023, and 11% from August 2025. Four different regimes in ten years.

Housing has the path with the highest financial stakes. The 5% rate was introduced in December 2008, with a threshold of RON 380,000 and a "one home per person" limit. The threshold rose to RON 450,000 (2016), was supplemented by an extra band up to RON 700,000 (2022 only), was replaced by a single RON 600,000 threshold (2023), moved to 9% (2024), and left the reduced regime on 1 August 2025 — except for the transitional regime that closes on 30 September 2026.

Foods with added sugar show how a reduced rate can be used as a public-health tool: from 2024, foods with more than 10 g of added sugar per 100 g were removed from the reduced regime. The exception for panettone-style cake and biscuits, obtained in 2023, was removed in 2025 — only the exception for powdered milk for newborns, infants and young children survived.

Prosthetics and orthopaedic products left the logic of reduced rates altogether: since 11 June 2023 they are exempt with a right of deduction, i.e. effectively 0% — a more favourable regime than any reduced rate, because the supplier keeps the right of deduction. Law 141/2025 left them untouched.

Electricity and natural gas have never had a reduced VAT rate in Romania. The state's intervention between 2021 and 2025 was done through price capping and compensation, not through taxation.

A snapshot of 2026

As of this article, the system has two base rates — 21% standard and 11% reduced — plus exemptions with a right of deduction. In practice, however, in August and September 2026 a third rate is still being invoiced: the transitional 9% for housing, discussed below. The 11% list is the one in article 291 paragraph (2) of the Fiscal Code, in the form given by Law 141/2025.

What remains effectively at 0%

The exemptions with a right of deduction under article 294 function economically as a zero rate: no VAT is charged, but the right of deduction is kept. Law 141/2025 amended article 294 paragraph (5) — it repealed the provisions on non-profit entities — but left untouched:

• exports and intra-Community supplies of goods;
• international transport related to exports;
• prosthetics and their accessories, except dental prosthetics (which are exempt without a right of deduction);
• orthopaedic products;
• construction, rehabilitation and modernisation services for state hospital units;
• the supply of medical equipment, devices, appliances, materials and sanitary consumables to hospital units within the state public network — in practice, the most frequently applied exemption from the package introduced by Law 88/2023.

The key 2026 thresholds, in brief

Where Romania stands against the rest of the Union

The two figures we started from — the threshold and the rate — read differently once placed next to their European equivalents. Romania has a standard rate right at the EU median, while also having one of the most generous exemption thresholds in the Union. The combination is not accidental: a high threshold removes a large number of small companies from the system, which means the burden of collection falls on fewer taxpayers.

What the numbers actually say

On the rate, Romania is perfectly median. Its 21% places it in the largest group in the Union — seven states tied: Belgium, the Czech Republic, Latvia, Lithuania, Romania, Spain and the Netherlands, occupying ranks 14–20 together. The median of the 27 values is exactly 21%, while the average is 21.9% — so Romania sits slightly below the average. The August 2025 increase did not move it out of the median cluster, it simply brought it from the low end into the middle.

On the threshold, Romania ranks 5th. Its RON 395,000, about €75,200, places it after France, Ireland and Italy (€85,000 each) and after the Czech Republic (about €81,000). The comparison deserves an important nuance, though: France and Ireland reach that €85,000 only for supplies of goods. For services, their threshold drops to €37,500 and €42,500 respectively — less than half the Romanian one. A consultant, an IT professional or a translator in Romania effectively works with the most generous threshold in Western Europe.

Adjusted for purchasing power, Romania leads. The Tax Foundation notes explicitly that, on a PPP-adjusted basis, the Romanian threshold is the highest in Europe. And the regional gap is large: Poland sits at around €56,600, Bulgaria at €51,130, Hungary at roughly €50,300.

At the other end of the ranking sit Denmark, with 50,000 kroner (about €6,700), and Greece, with €10,000. Spain is a special case: it is the only member state with no domestic exemption threshold at all — any activity must register for VAT from the very first euro earned.