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The new reduced VAT rate for food to be applied starting June

Written by: Bridgewest

The_new_reduced_VAT_rate_for_food_to_be_applied_starting_June.jpgThe Value Added Tax in Romania will be reduced starting 1 June for all foodstuffs. The measure is part of a bill amending the Tax Code and was published in the Official Gazette. The reduction will apply without distinction, even for soft drinks and food services. This measure targets the suppliers of goods and services in Romania. Our accountants in Bucharest are ready to offer you any additional information about how this change may influence your business.

Categories of products that benefit from the reduced rate

 
The reduced VAT rate of 9% will apply for the following categories of goods and services:
 
- food;
- beverages, excluding alcoholic beverages;
- seeds, plants, ingredients used in the preparation of foodstuffs;
- products used to supplement or reduce food.
 
The VAT rate is currently calculated at 9% for certain products, like bread and bakery products (croissants, rolls, pretzels, loafs etc.) and also for wheat flour, black flour, rye flour and others. The reduced VAT rate of 9% will also apply for restaurant and catering services in Romania, but excluding alcoholic beverages.  Our team of accountants in Bucharest is ready to assist you, if you have any questions about how this reduced rate influences your restaurant or any other business in Romania.

Reasons for the reduction

 
The motive for the reduction is that the food expenditure on the Romanian population is one of the largest in the European Union. Additionally, this measure also aims to reduce evasion in the foodstuffs business (currently, evasion in this business sector is one of the largest in the country). An official statement made by the Finance Ministry states that this measure needs to be announced well in advance so that companies can prepare all the needed accounting procedure and other operations.
 
Other fiscal changes intended by the Romanian Government include a general VAT reduction from 24 to 20%. It is thought that this measure could be applied starting January 1st 2016.
 
Feel free to contact our accountants in Romania for more information about the taxation system in the country or if you are in need of specialized accounting services in Bucharest.