Accounting Challenges Faced by Companies in Romania at the Time
When Romania’s standard VAT rate increased from 19% to 21% as of 1 August 2025, pursuant to Law no. 141/2025, most of the attention focused on prices. The more difficult issues, however, emerged more quietly, with the first invoices, fiscal receipts and tax returns spanning the date of the change. For finance directors, the transition has manifested itself as a series of small technical traps, each of which may generate reporting discrepancies, penalties and margin erosion if not handled carefully. The following provides a practical overview of the areas where companies have encountered difficulties and the measures that need to be taken.
What actually changed on 1 August 2025
Law no. 141/2025, published in Official Gazette no. 699 of 25 July 2025, changed Romania’s VAT structure only a few days before it entered into force. The standard rate increased from 19% to 21%, while the previous two reduced rates of 5% and 9% were replaced by a single reduced rate of 11%.
The reduced 11% rate now applies to medicines for human use, certain food and beverages, subject to the conditions and exceptions provided by Article 291(2) of the Fiscal Code, water supply and sewerage services, books, newspapers and magazines in printed and digital format, firewood and certain forms of thermal energy, agricultural inputs, admission to cultural activities such as museums and, importantly for many companies, hotel accommodation services as well as restaurant and catering services, except for alcohol. Several categories, however, moved in the opposite direction, to the full 21% rate. These include photovoltaic panels and heat pumps, which previously benefited from the 9% rate, admission to amusement parks, cinemas, sports and cultural events, food supplements, veterinary medicines and foods with a high sugar content.
A limited transitional 9% rate was maintained for certain sales of dwellings, for usable floor areas of up to 120 sq. m and values of up to RON 600,000, where the contract and an advance payment existed before 1 August 2025 and the delivery took place by 31 July 2026. This period has ended, so, in practical terms, companies now operate under a two-rate system: 21% and 11%. Any real-estate files still open from that period should be reviewed one final time to confirm that the correct rate was applied.
The rule behind most errors: the rate follows the chargeable event
The most common error in the first days concerned the date that determines the applicable rate. Under Romanian VAT legislation, the applicable rate is determined by reference to the chargeable event, generally the date on which the goods are supplied or the service is provided. As a general rule, the applicable rate is the one in force on the date of the chargeable event, subject to the exceptions provided by the Fiscal Code for situations where VAT becomes chargeable earlier.
In practice, a supply completed on 31 July 2025 was subject to the 19% rate even if the invoice was issued in August, while a supply made on or after 1 August 2025 is subject to the 21% rate even if the offer, order or part of the payment was made earlier. Companies applying the cash-accounting VAT system follow the same logic. For them, the collection date determines when VAT becomes chargeable, but the rate remains the one determined at the time the goods are supplied or the service is provided. Applying this sequence incorrectly creates differences that ANAF systems may subsequently flag.
Advance payments and the adjustment trap
Advance payments invoiced before 1 August 2025 at the old rate, relating to a supply completed only after that date, are one of the areas in which many finance teams encountered difficulties. The correct treatment requires an adjustment. On the final invoice, the previous advance payment is reversed at the old 19% rate, and the full value of the supply is then taxed at the new 21% rate, so that the customer ultimately bears VAT at the rate in force when the supply takes place.
Failing to reverse the advance payment, or simply adding the difference on an ad hoc basis, leaves the accounting records and e-invoice data unreconciled, precisely the type of discrepancy that may appear in a pre-filled VAT return. Any advance payment, deposit or staged billing that crossed the date of the change should be reviewed to confirm that the advance was adjusted at the old rate and the difference was taxed at the new rate.
As an exception, supplies of dwellings that meet the conditions of the transitional regime provided by Law no. 141/2025 may continue to benefit from the 9% VAT rate until 31 July 2026, provided that the statutory conditions concerning the dwelling, the purchaser and the advance payment made before 1 August 2025 are met.
Returns and discounts: as a rule, the rate of the original transaction is followed.
A similar trap works in reverse. When a company processes a return or grants a discount for a sale that was originally taxed at 19% or at the former 5% or 9% rates, the adjustment must be made using the rate originally applied. A product sold in July 2025 with 19% VAT and returned in September 2025 must be reversed at 19%, regardless of the rate currently proposed by default by the software.
This rule can easily be applied incorrectly after the accounting system has been updated to the new rates, because the rate currently offered by the application is the current one. Credit notes and adjustment documents must be checked line by line against the rate applicable to the original transaction. This discipline must be maintained for months after the change, for as long as sales made at the old rates may still generate returns or corrections.
Cash registers, POS systems and fiscal receipts: the pressure of reprogramming
For retailers, the hospitality sector and any company issuing fiscal receipts, the greatest pressure in the first days of August 2025 was technical. Electronic fiscal cash registers had to be reprogrammed from 19% and 9% to 21% and 11%, so that the new rates could be used from business conducted on 1 August 2025 onwards.
A small number of authorised distributors serve a very large number of customers, which created bottlenecks, and companies that notified their supplier late may have found it impossible to complete the update on time.
The exposure in this area is real and quantified. Fiscal receipts showing an incorrect VAT rate may attract fines ranging from RON 20,000 to RON 30,000, while irregularities concerning accounting documentation may attract fines ranging from RON 2,000 to RON 20,000.
The recommendations during the transition period were firm: a company that genuinely could not apply the correct rate should have suspended the affected sales until the equipment was remedied. ANAF treats a rate discrepancy as a tax-risk indicator and, since most point-of-sale systems can be updated remotely, technical difficulties carry little weight as a justification.
ERP systems and invoicing software: master data and copied documents
Beyond cash registers, the change highlighted how much VAT-rate logic is embedded in system configurations. Master data for products and services had to be remapped, because items moving from the former 9% or 5% rates to the new 11% rate behave differently from those moving to 21%, making a blanket update unsafe. Teams that exported and re-imported product lists through spreadsheets to apply differentiated rates generally performed better than those that changed individual records.
Copying documents is a more subtle issue. When an invoice or pro forma invoice is duplicated from a template created before August 2025, most systems retain the rate saved in the original document instead of taking the current rate from the product master data. Every copied or recurring document created around the date of the change should be checked, because an old rate may propagate unnoticed through an entire invoicing process.
e-Factura and RO e-VAT: when an incorrect rate becomes a reporting discrepancy
In previous years, a rate error could remain unnoticed until a tax audit. This is no longer the case. Through RO e-Factura, invoice data reaches ANAF, while the RO e-VAT system pre-fills VAT returns, meaning that an incorrect rate becomes visible almost immediately and is checked against the taxpayer’s own returns.
Contracts and prices: who bears the two percentage points
The commercial question behind the accounting treatment is who bears the additional two percentage points of VAT from 1 August 2025. Contracts and price lists stated exclusive of VAT automatically pass the increase on to the customer. Where prices are stated inclusive of VAT, which is common in B2C and in many fixed-fee arrangements, the company absorbs the difference through a lower margin unless it repositions its prices.
Thus, the first days represented both a pricing exercise and a compliance exercise. Standard terms, offers, catalogues and long-term contracts had to be reviewed to determine whether prices were stated inclusive or exclusive of VAT, followed by a decision as to when the increase would be passed on to the customer and when prices would be maintained for competitive reasons. The move from 9% to 11% for food, accommodation and restaurant services, as well as the increase to 21% for products such as solar equipment, had particularly significant effects for companies in these sectors.
Cash flow and the broader tax package
The rate increase should not be analysed in isolation. A higher standard rate increases both the VAT collected by the company and the deductible VAT paid, changing the timing and size of VAT positions and, for some companies, the working-capital cycle associated with VAT settlement.
What should finance directors have done at that time?
For companies that did not manage the first days of the transition perfectly – and there were many such cases – the priority is to close the gaps before they grow into discrepancies in a pre-filled return or during a tax audit:
- Retest the chargeable-event logic. Confirm that invoicing and ERP systems determine the rate based on the date of supply or provision of services and perform sample checks on transactions from the end of July 2025 and the beginning of August 2025.
- Reconcile advance payments and adjustments. Review each advance payment that crossed the date of the change to confirm that the advance was reversed at the old rate and the difference was taxed at the new rate.
- Check fiscal receipts and master data. Confirm that cash registers and product master records show the correct new rates of 21% and 11% and that no copied or recurring document still contains an old rate.
- Reconcile electronic reporting with internal records. Compare data from e-Factura and the pre-filled RO e-VAT return with the company’s own accounting ledger and correct any differences through the appropriate documents.
- Reassess prices and contracts. Identify prices that include VAT and those stated exclusive of VAT and consciously decide in which cases the two-percentage-point VAT increase was passed on to the customer.
The transition to 21% looked simple on paper but proved demanding in practice. Almost none of the difficulty came from the new figure itself. The problems arose from transition points: invoices, advance payments, returns and fiscal receipts spanning the date of the change, as well as digital reporting, which identified discrepancies almost in real time. Companies that managed this transition best treated the change as an important project, with clear ownership, and reconciled their own systems before ANAF did. These are the companies that are least likely to encounter problems in future tax audits.
BPiON’s tax and accounting team can review your invoices, advance payments and e-Factura data from the transition and confirm the correct rates were applied. Get in touch to arrange a review.
