At the same time, Romania is making domestic adjustments to reflect fiscal realities — including an increase in VAT rates and corresponding updates to reporting requirements.

This article explores three important VAT-related legislative initiatives currently in draft form and subject to public consultation.

1. A new VAT registration scheme for Small Enterprises

The Romanian government has published a draft law transposing EU Directive 2020/285, which introduces a harmonised EU special VAT scheme for small enterprises. The directive mandates Member States to implement the new rules by 31 December 2024, with the aim of simplifying VAT obligations for SMEs and facilitating cross-border business activity.

The draft law proposes several substantive changes to the VAT regime for small enterprises in Romania, including:

Higher VAT registration threshold:

The national VAT registration threshold will rise from RON 300,000 to RON 395,000 (approximately €79,500 to €104,500, based on recent exchange rates). This increase reflects inflation and the intent to align with the EU-wide turnover cap of EUR 100,000 for VAT exemption eligibility.

Loss of Exemption on Threshold Breach:

Where the €100,000 turnover cap is breached — either in Romania or across the EU — the VAT exemption immediately ceases. The transaction that causes the threshold to be exceeded is not VAT-exempt and must be treated as subject to VAT.

Romanian taxable persons using the SME scheme in Romania;

Romanian taxable persons applying the scheme in other Member States;

Non-Romanian taxable persons using the scheme within Romania.

Identification and Compliance:

Foreign businesses registered under Romania’s VAT system using an “EX” identification number before 1 September 2025 will continue to benefit from the VAT exemption scheme, provided they meet the new criteria.

Transitional Provisions

The draft law includes special transitional rules to accommodate:

Businesses moving from the RON 300,000 to RON 395,000 threshold;

Foreign taxable persons that had been identified under the older rules.

If adopted in its current form, the new SME VAT regime will take effect on 1 September 2025, allowing a short window for businesses to prepare.

2. VAT Place of Supply Rules for Virtual Events

To keep pace with the digital economy, the EU introduced Directive 2022/542, which modifies the rules for determining the place of supply for virtual services. Romania’s draft law transposes these rules into the national VAT Code, particularly focusing on event-related services offered online. The revised rules apply to:

Admission to cultural, artistic, educational, sporting, scientific, and entertainment events, including exhibitions and fairs;

Virtual and live-streamed access to such events;

Ancillary services related to admission.

Importantly, the rule change applies only when the recipient is a non-taxable person (i.e., private individuals or consumers).

Update to the Romanian VAT place of supply rules

Under the proposed amendments, the place of supply will be the location of the consumer — specifically, where they are established, have their permanent address, or usually reside. This approach ensures that VAT revenues are allocated to the country of consumption, rather than the supplier’s location. These changes are expected to apply from 1 September 2025, in line with the other VAT reforms discussed in this article.

To comply, providers must:

Determine the customer’s country of residence;

Charge and remit VAT based on the applicable local rate;

Possibly register in multiple jurisdictions, or use the One Stop Shop (OSS) regime to simplify reporting.

For digital economy operators, this represents both a compliance challenge and an opportunity to streamline VAT processes under the OSS.

3. VAT Return: Statement 394 update following VAT rate rise

On 1 August 2025, Romania raised its VAT rate from 19% to 21% and consolidated its two reduced rates (5% and 9%) into a single reduced rate of 11%. These changes were enacted to increase public revenue and simplify the rate structure.

Draft Law on Statement 394

In response, the tax authorities have published a draft update to Statement 394, the informative declaration used to report:

The updated form will reflect the new VAT rates and provide additional clarity on how transactions should be classified and reported under the amended rate structure. The updated version of Statement 394 was published for consultation on 25 August 2025. While the exact implementation date has not been finalized, it is expected to coincide with or shortly follow the September reforms.