The EU Council approved Romania's request to increase the turnover threshold of companies that have to pay a Value Added Tax (VAT), from EUR 35,000 to EUR 50,000. The decision was recently published in the EU Official Gazette.

The decision features a threshold of EUR 65,000 at the exchange rate when Romania joined the EU, which was of around RON 3.3 per EUR, that would translate into some EUR 50,000 at the current rate.

The measure is valid until the end of 2014 or until a new European law sets new thresholds.

Romania's plan to increase this threshold was included in the letter of intent with the International Monetary Fund (IMF) and the European Commission in 2010. The document also mentioned that Romania's Finance Ministry was planning to introduce a simplified taxation system for companies with a turnover below the EUR 50,000 threshold.

Companies which do not pay VAT in Romania have simpler accounting procedures, as those that pay VAT have to pay it to the state for the products and services they sell, and ask for a VAT refund for the products they buy from other VAT payers.

editor@romania-insider.com