Finance minister of Romania asserts that their fiscal package aligns with discussions at the EU level and seeks a favorable evaluation.
Romanian Finance Minister Alexandru Nazare has unveiled a new fiscal package aimed at generating additional government revenue and reducing the budget deficit. The measures, effective from August 1, 2025, include tax increases, new contributions, and sector-specific reforms.
**Key Changes**
- **VAT Rates:** The standard VAT rate is increased from 19% to 21%. Existing reduced VAT rates of 5% and 9% are replaced by a single reduced rate of 11%. These changes apply to a wide range of supplies, including food, medicine, and services in the hospitality sector.
- **Excise Duties:** Excise duties on fuel, alcohol, and tobacco products will increase by approximately 10%. To soften the impact on the transport sector, a partial refund scheme for fuel excise will be implemented.
- **Health Insurance Contributions:** A new health insurance contribution (CASS) will be introduced on pension income exceeding RON 3,000 monthly. This contribution applies only to the excess amount over this threshold.
- **Banking Sector Tax:** The tax on bank profits will be doubled, significantly increasing the fiscal burden on the banking sector.
- **Gambling Taxation:** The fiscal package includes increased taxation on gambling activities as part of the broader revenue enhancement measures.
**Impact**
The fiscal package is projected to generate RON 9.5 billion in additional revenue for 2025, with associated increased spending of around RON 1.2 billion. Including savings from capping bonuses for hazardous work conditions, the net fiscal impact for 2025 is about RON 10.75 billion.
For 2026, the projected revenue impact reaches RON 35 billion, while expenditures rise to RON 57 billion. Part of this expenditure includes the freezing of salaries, pensions, and related entitlements as outlined in the Trenuleț Ordinance.
The reforms align with ongoing negotiations with the European Commission and aim to position Romania for positive fiscal reviews at upcoming EU meetings, particularly the ECOFIN Council session. The measures mark a transition toward a more stable, investment-oriented economy and include broader commitments from the government to improve fiscal sustainability, deficit reduction, and transparency in fiscal decision-making.
In summary, Minister Nazare's fiscal package combines higher VAT and excise taxes, new health insurance levies on pensions, and increased sector-specific taxes like those on banks and gambling, collectively designed to reduce the deficit and strengthen Romania's fiscal position in coordination with EU requirements.
The fiscal package announced by Romanian Finance Minister Alexandru Nazare, effective from August 1, 2025, will also involve changes in the politics and policy-and-legislation sphere. This includes an increase in the standard VAT rate from 19% to 21%, and the introduction of a new health insurance contribution (CASS) on pension income exceeding RON 3,000 monthly, which will have a significant impact on the general-news landscape, particularly in the finance and business sectors. The measures aim to position Romania for positive fiscal reviews at upcoming EU meetings, such as the ECOFIN Council session.
