Main fiscal changes following Law 141/2025

Main fiscal changes following Law 141/2025

The main changes concern:

• increase of the standard VAT rate from 19% to 21% and consolidation of reduced VAT rates (the 5% and 9% respectively) to 11% for some essential goods and services;
• increase of excise duties by 10% on fuels, some alcoholic beverages and tobacco;
• imposing CASS (health insurance) on pensions exceeding 3,000 lei;
• increase of the dividend tax (from 10% to 16%);
• increase of the additional tax applicable to credit institutions;
• increase of taxes levied for gambling activities.

I. Amendments to the Tax Code regarding VAT

I.a. VAT Changes – the new system provides for two rates: standard rate of 21% and reduced rate at 11%

Art. 291 paragraphs 1 and 2 of the Fiscal Code will change by keeping a single reduced rate of 11% (applicable to certain essential goods and services), the standard quota being increased from 19% to 21%.

The following categories of goods delivery and services (to which previously the reduced applicable quotas were 5% and 9%) will be subject to the reduced rate of 11%.

• Medicines for human use;
• Food and non-alcoholic beverages intended for human and animal consumption, delivery of domesticated live animals and birds of species whose CN codes are established by Methodological Norms. Reduced rate applicability exceptions: food supplements, alcoholic drinks, non-alcoholic beverages classified under CN code 2202, foods with added sugar over 10g/100, other than powdered milk for newborns, infants and young children; Excepții de la aplicarea cotei reduse: suplimentele alimentare, băuturile alcoolice, băuturile non-alcoolice încadrate la codul NC 2202, alimentele cu zahăr adăugat de peste 10g/100, altele decât laptele praf pentru nou-născuți, sugari si copii de vârstă mică;
• Water for irrigation, water supply and sewerage services;
• Fertilizers, pesticides, seeds and related agricultural services;
• Access enabling services to: castles, museums, memorial houses, historical monuments, architectural and archaeological monuments, zoological and botanical gardens;
• Firewood in the form of trunks, logs, twigs, branches or similar type or sawdust and wood waste and scraps delivered to natural and legal persons for heating;
• Heat delivered during the cold season to population, hospitals, schools, NGOs and social services providers;
• Books, school textbooks, newspapers and magazines (including those in electronic format) except those mostly or totally consisting of video or musical audio content and those exclusively or mainly intended for advertising;
• Cultural and educational services: access to museums, historical monuments, zoological and botanical gardens;
• Delivery of buildings as part of the social policy (nursing and pensioners’ homes, children's homes, rehabilitation and recovery centers for minors with disabilities);
• Accommodation services in the hotel and camping sector;
• Restaurant and catering services, except alcoholic beverages and those falling within CN code 2202.

Certain deliveries of goods and services ( previously subject to reduced VAT rates (5% or 9 %) will be subject to a standard of 21%.

These categories include:

• Renewable energy systems (such as photovoltaic panels, heat pumps and other low emissions low), delivered to homes or public institutions;
• Access services to recreational and cultural activities, including sporting events, fairs, exhibitions, funfairs, amusement parks and theme parks;
• High sugar content food products, such as cookies and “cozonac” which exceed the threshold of 10g of sugar/100g of product (except products intended for infants and small children);
• Veterinarian drugs delivery;
• Food supplements as defined by Law 56/2021 regarding food supplements;
• Delivery of seeds, food for bees, plants and cooking ingredients;
• Delivery of housing as part of the social policy, except for transition the provisions applicable for a period of 1 year which maintain the reduced rate of 9% subject to the cumulative fulfillment of the following additional terms (notaries public are liable for their verification):

1. 1. usable area under 120 square meters (excluding annexes) and value (including of the value the land on which it is built) of maximum 600,000 lei;
   2. conclusion a legal sale-purchase agreement by August 1, 2025;
   3. integral payment of a down-payment of at least 20% of the value of the house until July 31, 2025;
   4. natural persons should not have purchased another housing at the reduced VAT rate after January 1, 2023;
   5. delivery to be executed by July 31, 2026.

The VAT exemption is maintained for delivery of medical prostheses and their accessories, including delivery of dental prostheses, as well as the VAT exemption for orthopaedic prostheses.

I.b. Exemptions for delivery and services for medical facilities operated by nonprofit entities

VAT waivers previously applicable to some health goods and services deliveries, performed by non-profit entities, will be repealed.

The following facilities are repealed:

• VAT waivers for hospital construction services, rehabilitation and modernization hospital, provided to:

1. 1. nonprofit entities registered in ANAF public register, if said services were offered free of charge to public hospitals or hospitals owned and operated by these entities;
   2. companies wholly owned by nonprofit entities, subject to strict compliance with several strict requirements (exclusive medical use, without sale and without patient charges);

• VAT waiver for delivery of medical equipment, sanitary consumables, safety equipment and other similar goods, intended for use in healthcare or by people with disabilities, if:

1. 1. the goods were purchased by nonprofit entities or companies wholly owned by them;
   2. had been donated or made available free of charge to hospitals in the public network or used in their own hospitals.

Although these VAT waivers will be repealed starting August 1, 2025, a transitional VAT refund mechanism is provided for operations executed before this date (VAT can be recovered by refund from the state budget, based on a procedure to be issued by order of the Finance Minister). înainte de această data (TVA va putea fi recuperată prin restituire de la bugetul de stat, în baza unei proceduri ce va fi reglementată prin ordin al Ministrului Finanțelor).

The refund is subject to its application being filed by October 31, 2025.

Refund use is strictly limited to financing the purchase of medical goods and/or services, by non-profit entities or companies wholly owned by them.

II. Dividend and special indirect tax changes

For the profit tax:

II.a. Increase in the dividend tax rate

Starting with January 1, 2026, or the first day of the modified fiscal year beginning in year 2026 respectively, the dividend tax rate will be increased from 10% to 16%, being applicable to the gross value of distributed dividends. The change applies to:

1. dividends paid by Romanian legal persons;
2. dividend income obtained from Romania by non-resident persons.

For dividends distributed in during 2025, respectively during the modified fiscal year beginning in 2025, based on interim financial statements, the 10% tax rate is maintained (applicable rate even after dividend regularization based on 2025 financial statements, the tax recalculation at the new 16% quota not being necessary).

II.b. Increase in the specific turnover tax for credit institutions

Specific tax rate on turnover applicable to banking institutions will increase from 2% to 4%. This change will be applicable for the period July 1, 2025 – December 31, 2025, and will be maintained after January 1, 2026.

Exception: credit institutions – Romanian legal persons and branches in Romania of credit institutions – foreign legal persons, which hold a market share under 0.2% of the total net assets of the Romanian banking sector will continue to apply the 2% rate, for the period July 1, 2025 - December 31, 2026, inclusive.

Also, in the situation in which the taxpayer performs operations in the period July 1 – December 31, 2025 leading to the growth or reduction of the elements used for calculating the turnover related to the period January 1 – June 30, 2025, it must recalculate the turnover tax for the period January 1 – June 30, 2025, by filing an amended statement.

Accounting errors related to income that influence turnover in previous years, but which are corrected based on carried forward results, are to be included in the turnover for the year in which they are identified, by filing an amended statement for the year in which the error occurred, according to the provisions of the Fiscal procedure code.

III. Tax Code changes regarding income tax and mandatory social contributions

Income tax changes

• Tax rate increases from 10% to 16% for dividends distributed starting with January 1, 2026.
• The applicable tax regime for bonds issued by legal persons resident in Romania on capital markets outside Romania is clarified. Interest income tax calculation, declaration and payment obligations are transferred from the bond issuer to the interest income beneficiary, resident legal person, who owns such bonds.
• Gambling income will continue to be taxed on income tranches but the minimum tax rate will increase from 3% to 4%, and the maximum rate remains 40%.
• Scrap metal sale (ferrous, non-ferrous and alloys) income derived from the sale of personal holdings of natural persons will be included in the “income from other sources” category”, the tax (at the tax 10% rate) being withheld at source by the economic operator. Income derived from all other personal holding waste disposal is considered non-taxable income.

Changes regarding mandatory social contributions

• Taxpayers who obtain pension income in excess of 3,000 lei per month, regardless if from the public system, from privately managed funds or from abroad:

1. 1. are liable for a social health insurance contribution calculated for the amount in excess of 3,000 lei per month, for each pension source; the National Public Pensions House will no longer withhold the social health insurance contribution for all pension sources, but only for those paid out by the Romanian pensions system (Pillar I); the health insurance contribution statement and payment for private, occupational or foreign-earned pensions obligations lie with the tax payer or other paying entities;
   2. the social health insurance contribution is income tax deductible;
   3. if the taxpayers also receive intellectual property income, they will be exempt from paying insurance contribution health social for the latter. Also, should they receive income from independent activities up to 6 national economy minimum wages, they will not be liable for the contribution difference provided for by law.

• The following beneficiary categories will no longer be exempt:

1. 1. husband, wife and parents with no income, dependents of an insured person;
   2. people exempt by special laws (such as those politically persecuted, deported, war veterans, etc.);
   3. patients with conditions included in national health programs established by the Health Ministry, until healing, except those with conditions oncological;
   4. people who benefit from unemployment benefits, social assistance (guaranteed minimum income) or other social protection rights;
   5. the people maternity/paternity leave or adjustment leave, following completion of the adoption procedure;
   6. Monastic staff of recognized cults.

• Natural persons opting for payment of social health insurance contribution after July 31, 2025, must pay in 2 installments as follows:

1. 1. 25% of the due social health insurance contribution, on the date of filing the statement through which this option is exercised;
   2. 75% of the due social health insurance contribution by May 25th of the year following the year during which the option was exercised.

• For legal persons who have opted for payment of the social health insurance contribution by July 31, 2025 inclusive, the payment due date is the one in force on the date of exercising the option, namely May 25, 2026.
• Natural persons paying social health insurance contributions may voluntarily opt to cover the social health insurance contributions for dependents (such as souse, parents or no income children) through the Unique statement; the social health insurance contribution basis is 6 minimum wages and payable in two instalments;
• Pregnant and post-partum women maintain their public health system insured person status.

Sick leave changes

The sick leave indemnity percentages are reduced as follows:

• 55% for sick leave certificates issued for up to 7 days’ temporary work incapacity;
• 65% for sick leave certificates issued for 8 to 14 days’ temporary work incapacity;
• 75% for sick leave certificates issued for more than 15 days’ temporary work incapacity.

The gross monthly amount for cardio-vascular temporary work incapacity is set at 75% of the calculation basis.

IV. Excise duties

Excise duty increases for the following:

• Beer
• Wines
• Fermented drinks, other than beer and wines (including apple and pear cider, mead, berry drinks)
• Intermediate products
• Ethylic alcohol (including alcohol produced by the small distilleries)
• Cigarettes
• Cigars
• Finely cut smoking tobacco for rolling in cigarettes
• Other smoking tobaccos
• Leaded gasoline
• Lead-free gasoline
• Diesel (a state support compensation mechanism to be introduced for diesel fuel used for goods and persons transportation)
• Fuel oil
• Liquefied petroleum gas
• Natural gas
• Kerosene
• Coal and coke
• Electricity.

In particular:

1. 1. For 2026 the excise for gasoline and diesel fuel will not be inflation-indexed;
   2. The cigarette excise will be maintained at 576,360 lei/1.000 cigarettes between August 1st 2025 and March 31st 2026.

V. Changes to the gambling industry

The following taxes will be increased:

• the authorization fee tax rate will be increased from 21% to 23% of the operator’s income;
• class A slot machine authorization tax will be increased from Eur5,300 to Eur5,800;
• classes 1 and 3 remote gambling authorization tax will be increased from 21% to 27 % of the operator’s gambling revenues;
• a specific vice fee for slot machines and VLT will increase from Eur500/authorized post/year to Eur1,000/authorized post/year.
• gambling gains are subject to progressive withholding taxation as follows:

In addition, a new fee for lotto games, except video lottery, at a rate of 6.5% on licensed operators' gambling revenues. The fee is calculated and due in full to the state budget for the previous month by the 25th of the following month inclusive. The amount and the method of calculating taxes specific to regulated gambling above apply starting on the 1st of the month following the publication of the law in the Romania Official Gazette (i.e. August 1st 2025).

VI. Other changes

The national road usage fee (Rovinieta) as well as the amounts of fines assessed for failure to pay said fee are increased.

Fiscal changes following other normative acts

The Fiscal Procedure Code is amended by Government Ordinance No. 11/2025, thus improving the legislation in the field of advance pricing agreements.

Transactions between affiliated taxpayers must comply with the principle of market prices - transfer prices. In this regard, the tax authorities may request the transfer pricing file according to 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.

Government Ordinance No. 11/2025 improves the legislation regarding an advance pricing agreement, respectively improves the legislation from the perspective of amicable collaboration between tax authorities in Romania and tax authorities from other states with which Romania has signed double taxation avoidance conventions or other tax agreements.

In particular:

1. 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 for transactions made in the previous period;
2. If an extension of an advance pricing agreement is requested for the previous period, this can be for up to 5 fiscal years concluded prior to the one in which the request was submitted.
3. If there is an ongoing inspection and an extension of an advance pricing agreement is requested, the tax inspection may be suspended.

The ordinance also establishes that a new procedure regarding the issuance/modification/extension of advance pricing agreements will be approved by order of the National Fiscal Administration Agency President.

From the point of view of the collaboration between the Romanian tax authority with the tax authorities of other states, the procedure for resolving tax disputes is improved and becomes more easily applicable.

Low no. 141/2025. Article by Prospect Consult