Dear international real estate developers and investors,
Comprehensive tax reforms from 1 August 2025 - and you must act accordingly.
On 1 August 2025 a series of significant fiscal reforms took effect in Romania, under Law 141/2025. The purpose of this update is to present the main expected changes and how you should prepare - both at the personal level and for your companies and business projects.
Adv. Ilan Leibovitch and the office team
Key updates:
1. Increase in dividend tax - 16% (from 1.1.2026)
- From 1 January 2026 the dividend tax will rise from 10% to 16%.
- The increase will apply to dividends actually paid after this date - even if the profit was accumulated earlier.
- If you actually pay the dividends before the end of 2025, the 10% tax rate will still apply to them.
2. Health and social insurance (CASS) - calculation by income brackets:
- Calculation ceilings based on Romania's minimum wage (4,050 lei):
- - Between 24,300 lei and 48,600 lei: calculated on 6 minimum salaries.
- - Between 48,600 and 97,200 lei: on 12 salaries.
- - Above 97,200 lei: on 24 salaries.
- Additional income is also taken into account: rent, interest, capital gains, crypto and more.
3. Obligation to pay CASS also for populations that were previously exempt:
- From August 2025 - pensions above 3,000 lei will also bear health tax (on the amount above that).
- Spouses/parents dependent on the investor, parents on parental leave, the unemployed, recipients of social benefits and others will also be required to pay or to hold private health insurance.
4. Changes in the rate of sick pay:
- Until 31.7.25: 75% of salary.
- From 1.8.25:
- - Up to 7 days - 55%.
- - 8-14 days - 65%.
- - Beyond that - 75%.
5. VAT - changes in rates from 1.8.2025:
- The standard VAT rate will rise from 19% to 21%.
- The 5% VAT rate - will be abolished.
- The 9% VAT rate - will rise to 11%.
- Some of the products and services to which 11% will apply:
- - medicines, basic food, books, hotel services, restaurants, water services, agriculture, museums and more.
- Please note: accounting and invoicing systems must be updated accordingly.
6. Purchase of apartments - 21% VAT instead of 9%
- From 1.8.2025, the purchase of apartments will be subject to 21% VAT.
- Limited exception:
- - A private individual will be able to buy only one apartment at 9% VAT if they meet the following conditions:
- - - The apartment's area is up to 120 sq.m.
- - - Its total value does not exceed 600,000 lei (before VAT).
- - - A binding purchase agreement was signed by 1.8.25, and an advance payment of at least 20% was made by 31.7.25.
- - - The transaction will be completed by 31.7.2026.
- - - The buyer has not previously purchased a property with reduced VAT (since January 2023).
Questions and answers - important points:
- Can I issue an invoice with the old VAT in July for a service delivered in August? No - services will be classified by the date of performance, not the date of the invoice.
- Will an advance payment made in July remain at 19% VAT? Only if an invoice was issued and the full consideration was paid - otherwise an adjustment to 21% VAT will be required.
- Will a return of goods in August for a purchase made in July be at 19%? Yes - the return will be made at the tax rate at the time of purchase.
What is important to do now?
Close dividends before the end of 2025
Update the accounting system.
Examine the impact of VAT on open contracts and customer agreements.
Accurate as of the issue date. Laws, tax rates and procedures change; check the current position before any decision.
Translated from the Hebrew original. עברית