Decoding Romania VAT Rate: What You Need To Know About VAT

Comprehending Romania VAT rate system is essential for both individuals and enterprises. Romania has various VAT rate tiers, and each tier applies to a particular set of goods and services.

We explore details of Romanian VAT rates, tax identification numbers, compliance standards, and the complexities of income tax for foreigners in this blog.

Understanding these factors is crucial for financial compliance and clarity, regardless of whether you're a resident, non-resident, or business operating in Romania. To calculate your VAT, you can use our VAT calculator tool for quick and accurate computations.

Romania VAT Rate

The regular Romania VAT rate is 19%, which applies to most things you buy or services you use.

But, some things have a lower tax rate. For certain products like food and drinks or unique items like orthopedic products, there's a lower VAT rate of 9%. This helps make these things cheaper.

And for a few specific items, like books, newspapers, or when you stay in a hotel, there's an even lower VAT rate of 5%. Depending on what you're buying or using, the tax rate can differ to make some things more affordable.

Establishing and charging the appropriate Romanian VAT rates is the direct responsibility of businesses. The EU established the general guidelines for applying the standard, higher rate, and reduced rates; however, the government sets these. The EU requires that the standard rate be at least 15%.

Also read about; Hungary VAT Rate: A Complete Overview

Reduced & Zero VAT Number Romania

Romania VAT Rate	Type	Applicable to
19%	Standard	All other taxable goods and services
9%	Reduced	Food, medicine, equipment for disabled people, hotel stays, water, certain beers, soft drinks, flowers, and some farm supplies fall under a reduced VAT rate. Also, certain goods and services for on-board consumption during transportation.
5%	Reduced	Affordable housing, printed books, newspapers, cultural and sporting event tickets, amusement park entry, hotel stays, restaurants, takeaway food, and certain drinks at bars and cafes fall under a reduced VAT rate. Additionally, residential properties are included in this category.
0%	Zero	Intra-community and international passenger transport

VAT Compliance in Romania

If a foreign company is doing business in Romania with a Romanian VAT number, it must follow some rules. Here's what it should do:

• Make sure invoices have all the details the Tax Code asks for.
• Stick to the timing rules for taxes in Romania.
• Keep electronic invoices safe and agreed upon with customers.
• Maintain books and records for at least ten years.
• Handle credit notes and fix any mistakes.
• Use the approved exchange rates for foreign currencies.
• Compliance with the Romania VAT rate is important for not only consumers but also businesses to avoid penalties and legal issues.

Tax Identification Number Romania

In Romania, the tax identification number is called the Codul de înregistrare fiscală (Fiscal Registration Code). It's used to identify taxpayers for administrative and tax purposes - if you live there more than 183 days a year, you're a resident and need a Fiscal Registration Code.

Even if you're not a resident, you might need one if you earn money in Romania, like from a job or investments. All businesses in Romania, regardless of size or type, also need a Fiscal Registration Code.

To get a VAT number in Romania, individuals can go to a local office of the National Agency for Fiscal Administration (ANAF) with their passports and other documents. Businesses might need more help from a tax advisor.

Your Tax Identification Number will have different formats for individuals and businesses. It'll be on your tax papers or online ANAF account if you already have one.

Income Tax In Romania For Foreigners

The income tax you'll pay in Romania as a foreigner depends on your resident status:

Tax Resident:

• If you spend more than 183 days in Romania in a 12-month period, you're considered a tax resident.
• As a resident, you pay % a flat rate of 10% on all your worldwide income, regardless of source.
• This includes income from employment, investments, rental properties, and self-employment.

Non-Tax Resident:

• You're considered a non-resident if you spend less than 183 days in Romania.
• You only pay tax on income sourced in Romania.
• The general tax rate for non-residents is also 10%, but exceptions and double taxation treaties might apply.

VAT Registration Requirements

• For Entities Based in Romania:

  A taxable person with its headquarters, business location, or fixed establishment in Romania must register for VAT if its annual turnover exceeds RON 300,000. This entity must submit a registration form within 10 days of surpassing the threshold.

• For Non-established Entities:

  If a company from another place wants to buy or sell things with companies in Romania, it has to sign up for VAT. This particular tax registration is needed when they're involved in getting or giving services or products within the European community.

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FAQs

How do businesses comply with Romanian VAT regulations?

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What is the Fiscal Registration Code, and who needs it in Romania?

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What are the income tax rates for foreigners in Romania?

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