PA Focus October: Essential Insights for Public Affairs & Legal Professionals
This article explores Romania’s ambitious fiscal reforms outlined in the National Structural Budgetary Plan for 2025-2031, aimed at reducing the budget deficit and enhancing tax administration. Covering tax policy shifts, minimum wage…
This article explores Romania’s ambitious fiscal reforms outlined in the National Structural Budgetary Plan for 2025-2031, aimed at reducing the budget deficit and enhancing tax administration. Covering tax policy shifts, minimum wage reforms, and digital transformation efforts, it provides essential insights for public affairs and legal professionals navigating these impactful changes shaping Romania’s economic future.
Highlights of October
Fiscal Reforms on the Horizon
Romania’s National Structural Budgetary Plan 2025-2031 addresses the budget deficit through major tax and fiscal reforms. Key actions include reducing tax incentives, introducing environmental taxes, phasing out construction tax benefits by 2025, and automating property assessments by late 2025. The plan’s goals are to boost fiscal revenues, streamline the tax system, and reduce tax avoidance while adjusting tax rates and deductions. Although “adjustments” remain undefined, there’s no explicit mention of tax hikes—likely due to the election period. These changes aim to bring predictability and stability to Romania’s fiscal landscape over the next seven years.
Tax Administration and Digital Transformation
Romania’s tax reform focuses on digitization with systems like e-Factura and e-VAT, alongside legislative changes to boost tax collection and reduce VAT gaps. By Q1 2025, the microenterprise tax threshold will lower to €88,500, with fewer deductions and stricter rules on tax base splits, enhancing compliance and fiscal revenue.
Minimum Wage Increase and Labor Taxation
The government’s plan includes a minimum wage reform that links wage adjustments to inflation and productivity, ensuring wages do not fall below 45% of the average. If needed, additional increases will align with GDP growth per worker. Other reforms focus on climate change in agriculture, investments in green transition, digitalization, and boosting industry competitiveness. Minister Boloș also stated that he has submitted the plan to the European Commission, arguing against further reductions in the microenterprise threshold, as it would not significantly boost state revenues.
PSD’s 2025-2028 Governance Program promises fiscal stability with unchanged income tax (10%), corporate tax (16%), and VAT (19%) rates. Property taxes and the micro-enterprise threshold stay at EUR 500,000. PSD proposes up to a 5% tax cut on lower wages, aiming for a EUR 1,300 monthly minimum salary by 2029, alongside incentives for young people.
