What to Expect Romania is entering a new fiscal cycle in 2026 with significant reforms designed to stabilize public finances and reduce the budget deficit, in line with its EU commitments. The measures are outlined in Law 141/2025 and begin taking effect progressively from August 2025, with the full impact felt in 2026. Both individuals and businesses should prepare for higher tax burdens and stricter compliance requirements.

VAT Adjustments

 Starting 1 August 2025, the standard Value Added Tax (VAT) increased from 19% to 21%, while reduced rates have been simplified to a single 11% level. Certain exceptions, such as specific social housing transactions, will maintain a 9% rate until 31 July 2026. This shift is expected to broaden the tax base and generate additional revenues but will also raise consumer prices in most sectors.

Dividend Tax Increase

From 1 January 2026, the tax on dividends distributed to individuals and legal entities will rise sharply, from 10% to 16%. The change applies to all distributions made in 2026 or to fiscal years beginning in that year. Investors and shareholders will therefore face higher taxation on profits, which could affect corporate payout policies.

Health Contributions on Pensions

Another major reform targets pension income. From 1 September 2025, pensions above 3,000 lei per month are subject to a 10% health insurance contribution (CASS) on the portion exceeding this threshold. Pensions below the threshold remain exempt. This measure broadens the contribution base and aligns pensioners more closely with the general tax system.

Tax on Credit Institutions

The banking sector will also face a new burden. A 4% turnover tax applies to most credit institutions throughout 2026, while smaller banks with a market share below 0.2% will benefit from a reduced 2% rate until the end of 2026. This measure aims to secure additional revenues from a highly profitable sector, though it may influence lending costs.

Excise Duties and Property Tax

Excise duties on fuels, alcohol, tobacco, and sugary drinks have already increased in 2025 and will continue to rise in 2026. In parallel, Romania is preparing a gradual transition to property taxation based on market value rather than outdated valuations, which could significantly raise local tax bills, especially in urban areas. Public Sector Measures Beyond taxation, the government has frozen public sector wages and pensions at November 2024 levels and cut back on benefits such as vacation vouchers. Reforms in state-owned enterprises, pension calculation methods, and ministerial structures are expected to improve efficiency and transparency.

Conclusion

The fiscal landscape in Romania is tightening considerably in 2026. Higher VAT, dividend taxation, and contributions on pensions, coupled with targeted sectoral taxes, reflect the government’s effort to reduce the budget deficit and meet EU rules. While these measures strengthen public finances, they also present challenges for households, investors, and businesses alike. Adapting early̶through tax planning, cost management, and compliance̶will be essential for navigating this new environment.

INTERNAL LINKS:

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