Tax alert – Tax changes introduced by the new fiscal and bugetary measures
On July 25, 2025, the Romanian authorities published Law no. 141/2025 in the Official Gazette no. 699, introducing amendments to Law no. 227/2015 on the Romanian Fiscal Code.
Main fiscal measures:
I. Dividend tax – increase in tax rate
Starting with January 1, 2026, the dividend tax rate is increased from 10% to 16%. The new rate applies both to resident and non-resident individuals and legal entities, for dividends distributed starting with January 1, 2026, respectively with the first day of the amended fiscal year starting in 2026.
For dividends already distributed on the basis of interim financial statements from 2025 or the amended tax year starting in 2025, the tax rate applied will be 10%. It will not be necessary to recalculate the tax after the dividends have been adjusted based on the annual financial statements for 2025.
II. New tax rates at the level of the additional tax for credit institutions
Amendments are made to the level of the tax rate for the specific turnover tax due by credit institutions as follows:
- from 2% to 4% for the period July 1, 2025 – December 31, 2025;
- from 1% to 4% for the period January 1, 2026 – December 31, 2026;
- 2% for the period July 1, 2025 – December 31, 2026 applicable to credit institutions holding a market share of less than 0.2% of the total net assets of the banking sector in Romania.
III. Income tax and social security contributions
Starting August 1, 2025, a number of significant legislative changes have come into force, including: adjustments to the amount of medical leave allowance for common illnesses (other than work accidents), extension of the categories of individuals required to pay health insurance contributions (CASS), abolition of the free co-insurance system in the public health system, taxation of income from pensions, prizes, gambling, etc.
Medical leave allowance – lower compensation for short-term leaves
The gross amount of the allowance for medical leave granted for common illness or accidents outside of work, previously set at 75% of the calculation base, will now vary depending on the duration of each sick leave episode: 55% of the calculation base for leaves up to 7 days; 65% for leaves of 8–14 days; 75% for leaves over 15 days.
CASS becomes mandatory for more categories starting August 1, 2025
The following categories are no longer exempt from paying the 10% health insurance contribution:
- Co-insured individuals, such as spouses or parents who do not earn any income;
- Beneficiaries of laws with historical reparation character, for sums received under such special laws;
- Pensioners, for the part of pension income exceeding 3,000 RON/month. This rules is valid until 31 December 2027;
- Individuals receiving unemployment allowance or other social protection benefits from the unemployment budget;
- Individuals on adaptation leave under Law no. 273/2004 on the adoption procedure;
- Individuals receiving social aid under Law no. 416/2001 on the minimum guaranteed income;
- Individuals receiving child-raising allowance (up to 2 years, or 3 years for disabled children);
- Beneficiaries of inclusion and family support under Law no. 196/2016 on minimum inclusion income.
Exemption from health contribution for pensioners with intellectual property income
One of the new provisions introduced by the current legislative changes is that pensioners earning income from intellectual property rights are exempt from paying the health insurance contribution.
Health Co-insurance contribution is no longer free of charge starting September 1, 2025
Individuals without their own income (such as spouses or parents) will no longer be co-insured for free. Those who wish to support such individuals must pay an annual health fund contribution equivalent to 10% of 6 gross minimum wages (2,430 RON in 2025) for each co-insured individual.
This contribution is paid through the annual tax return (“Declarație Unică”), in two installments: 25% upon filing the declaration and 75% by the 25th of May the following year.
The insurance becomes active on the date of filing the declaration and is valid for 12 months.
As of September 1, 2025, current co-insured individuals will lose their status unless re-registered under this new mechanism.
Individuals who already filed the annual yax return and opted to pay CASS voluntarily before July 31, 2025, retain the legal payment deadline in effect at the time of their option: May 25, 2026, regardless of the co-insurance mechanism change on August 1, 2025.
Determining the Taxable Base for Pension Income Has Changed
The new regulations state that pension income from both Romania and abroad is taxed at a 10% rate on the gross income, reduced by the non-taxable monthly amount of RON 3,000 R and by the health insurance contribution (CASS).
Changes in Tax Rates for Income from Prizes and Gambling
Starting in August 2025, the tax rates on income earned by individuals from prizes and gambling and have increased.
Interest from Foreign Bonds Will No Longer Be Withheld at Source Starting August 1, 2025
For interest income earned by resident individuals from holding bonds issued by companies (Romanian legal entities) on foreign capital markets, the issuer is no longer responsible for calculating, withholding at source, and declaring the tax. This income is taxed at 10%, with the tax calculated and declared directly by the taxpayer through the single declaration.
IV. Value added tax
Changes of VAT rates
Starting with August 1, 2025, the standard VAT rate is increased from 19% to 21% and a single reduced VAT rate of 11% will be applicable.
Thus, the reduced VAT rates of 5% and 9% will be eliminated, being replaced by a reduced VAT rate of 11%, which applies only to the delivery of certain goods and services (such as: medicines, certain food and beverages, books, magazines, HoReCa services, etc.).
The new rates will apply to the chargeable event; thus each transaction must be analyzed for transitory cases.
Transitional measures are introduced for housing supplies as part of social policy that meet the conditions for the application of the reduced VAT rate of 9% before August 1, 2025. They maintain the reduced rate of 9% until July 31, 2026, under certain conditions.
For those products and services that were previously included under the reduced VAT rates of 5% or 9% and are not found under the new reduced rate of 11%, the standard VAT rate of 21% will be applied.
Repeal of some VAT exemptions
Starting with August 1, 2025, the VAT exemption is repealed for the construction, rehabilitation, modernization of hospital units, as well as for the supplies of medical equipment and accessories, normally intended for use in the field of health care or for use by people with disabilities, rendered/carried out to non-profit entities/companies wholly owned by non-profit entities.
Also, starting with August 1, 2025, the provisions on VAT refund, related to the above-mentioned exemptions, are also repealed.
V. Increase in excise duties rates
Starting with August 1, 2025, the level of excise duties will increase on several categories of products such as gasoline, diesel, alcohol, beer, wines, non-alcoholic beverages with added sugar. Also, the level of excise duties will increase again from 2026. The new amendments were introduced by Annex 1 of Title VIII "Excise duties and other special taxes".
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