Council Decision authorising Romania to increase the threshold for the special VAT exemption regime for small enterprises to EUR 65,000

Based on this Council Decision (“the Decision”), Romania is authorised to increase the threshold for applying the special VAT exemption regime for small businesses at EUR 65,000. The equivalent in national currency will be computed at the conversion rate on the day of Romania’s accession to the European Union. The Decision follows Romania’s request of 30 August 2011 for authorisation to derogate from the current threshold of EUR 35,000.

The Decision will take effect on the date of its notification. The new threshold will apply until the earliest between 31 December 2014 and the entry into force of a Directive amending the amounts of the annual turnover ceilings below which taxable persons may qualify for VAT exemption.

Increasing the threshold for the special scheme for small enterprises is a simplification measure, aimed at reducing the VAT obligations of small businesses and improving the general level of VAT compliance. Also, without being specifically mentioned, this measure appears to be aimed at tackling VAT fraud.

By Venkatesh Srinivasan, Partner – Head of Tax and Legal, Ernst & Young Romania

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