Prices for an array of goods and services will rise in August after the Romanian government increased VAT and excise duties. Train tickets, communications, retail goods, and health contributions for previously exempted categories are set to take effect.
To tackle an out-of-control deficit, the government decided to increase the standard VAT rate from 19% to 21%, and reduce the number of reduced rates to one, namely 11%, from the current two rates of 5% and 9%. On the other hand, several retailers have announced they are freezing prices for a range of products or applying discounts to offset the VAT increase.
CFR Călători announced that the increase in the VAT rate from 19% to 21% will raise train ticket prices by up to RON 4.5 (EUR 0.9), and the tariff update will be applied by all six rail operators. Second-class ticket prices will increase by a maximum of RON 3, and first-class tickets by up to RON 4.5, with these maximum values being reached for IC trains covering more than 600 km, stated the national railway passenger operator. The last time train ticket prices increased was on December 15, 2024, by 4.6%.
Due to the same increased rates, Romania’s leading communications company, Digi, announced that it will adjust, starting August 1, the tariffs for services provided and goods delivered, applying the new 21% VAT rate.
Also in response to the price hikes, retailers like Carrefour, Mega Image, and Lidl announced either discounts or price freezes on a range of products during August, according to Agerpres.
Increased rates
According to a PwC document, the reduced VAT rate will increase from 9% to 11% for the following goods/services: human-use medicines; food, including beverages for human and animal consumption, and live domestic animals and birds. VAT of 11% will also apply to water supply and sewage services, irrigation water for agriculture, delivery of fertilizers and pesticides, including chemical ones, seeds and other agricultural products for sowing or planting, and services typically used in agricultural production.
The same tax will also apply to housing used as retirement or care homes, children’s homes, and rehabilitation centers for minors with disabilities, accommodation in the hotel sector or similar sectors, including rental of campsites and restaurant/catering services.
The 5% VAT rate will increase to 11% for textbooks, books, newspapers, and magazines; access to castles, museums, memorial houses, historic, architectural, and archaeological monuments, zoos, and botanical gardens; firewood to individuals/legal entities; and thermal energy during the cold season to specific regulated consumer categories.
Conversely, VAT will rise to the standard 21% rate (from 9%) for veterinary-use medicines, plants and ingredients used in food preparation, seeds, and bee feed.
A 21% VAT will also apply to homes with a maximum usable area of 120 sqm and a value not exceeding RON 600,000. The move will significantly raise prices for homes.
Moreover, the 21% VAT will apply to the installation of photovoltaic panels, solar thermal panels, heat pumps, and other low-emission high-efficiency heating systems, including installation kits and all separately purchased components intended for public or residential buildings.
Excise duties to rise in two stages
Excise duties will also increase in two stages:
for alcohol and alcoholic beverages, by 10% from August 1, 2025, and another 10% from January 1, 2026;
for processed tobacco, by 3% from August 1, 2025, and 3% again from January 1, 2026;
and for gasoline and diesel, by 10% on both dates.
Moreover, starting August 1, 2025, excise duties will be introduced for still wines, apple and pear cider, and mead. As of January 1, 2026, these duties will rise by 10%.
Pensioners to pay health insurance contributions
Finally, pensioners will be required to pay a 10% health insurance contribution, or CASS, on the portion of pension income exceeding RON 3,000 (EUR 600) per month, for each pension entitlement. The measure applies to incomes earned between August 1, 2025, and December 31, 2027.
Other individuals required to pay CASS include: spouses and parents without personal income, dependent on an insured person; people receiving unemployment benefits or other social protection payments from the unemployment insurance budget; those on child-raising or accommodation leave; individuals receiving social assistance; and monastic personnel of recognized religious denominations.
Individuals earning income subject to CASS may opt to pay contributions for their dependents.
(Photo source: Costel Florin Astefanei | Dreamstime.com)
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