Romania Raises VAT Threshold to RON 395,000; EU Small Business VAT Scheme Implemented

Romania has officially amended its Fiscal Code through Ordinance No. 22 of 28 August 2025, published in the Official Gazette, aligning national VAT rules with the EU’s “small business scheme” under Council Directive (EU) 2020/285. At the heart of these changes is a higher VAT registration exemption threshold and new, streamlined rules for SMEs engaged in cross-border trade within the EU.

Key Features of the New VAT Rules

Cross-Border Small Business Scheme
The new rules mean that micro and small businesses established in one EU Member State are now eligible to claim VAT registration exemptions when trading in Romania — provided they do not surpass the Romanian threshold (RON 395,000) for local turnover and a pan-EU limit of EUR 100,000 for total turnover.

Reciprocal Exemptions
Romanian businesses can also benefit from VAT registration exemptions when operating in other EU Member States, as long as they:

• Do not exceed the local thresholds set by each country for VAT exemption

• Remain under the EUR 100,000 annual EU-wide turnover cap

This supports true cross-border SME activity, making VAT compliance less time-consuming and costly for small businesses expanding beyond national borders.

Threshold Increase
Romania’s annual VAT registration threshold jumps from RON 300,000 to RON 395,000 effective 1 September 2025 — raising the bar for when both local businesses and qualifying EU enterprises must register for VAT.

Transition Rules and Deadlines

• Businesses exceeding RON 300,000 but not RON 395,000 in August 2025: Registration is not required.

• Businesses exceeding RON 395,000 in August 2025: Must seek registration by 10 September 2025.

• Post-September 2025: Businesses may deregister if their turnover falls below the new RON 395,000 threshold.

Business Impact and Compliance Notes

Simplified EU Trading for SMEs

• SMEs engaging in modest cross-border transactions can avoid VAT registration headaches, provided their Romanian and EU-wide turnovers remain within set thresholds.

• The threshold increase delays or cancels registration for many growing businesses, reducing admin costs and compliance headaches.

Registration and Deregistration Process

• The Romanian Tax Administration will process new registrations and deregistrations under the updated law, and businesses should monitor turnover levels closely—especially for the transition month of August 2025.

Eligibility Monitoring

• Both Romanian and EU small businesses benefit if they closely track their sales across all EU states and respond promptly to the new requirements and deadlines.

These changes should foster more agile cross-border trade for small businesses, support growth, and reduce unnecessary regulatory burdens in the EU’s 2026 VAT landscape.