Global Daily Tax News, Romania Agrees New Reforms With EU On Tackling VAT Gap, (Oct 29, 2025)

Romania has reached an agreement with the European Commission on modifying goals regarding reducing the nation's value-added tax gap, securing EUR1bn in grants in 2026 as part of its National Recovery and Resilience Plan (NRRP).

The country has missed goals related to bringing down the scale of the nation's sizeable VAT gap. Instead, the Commission has agreed that the nation can satisfy its commitments by implementing structural and legislative measures to strengthen the institutional capacity of the tax agency, ANAF.

The VAT gap is an estimate of the VAT revenue lost due to tax fraud, tax evasion, tax avoidance and optimization practices, bankruptcies, financial insolvencies, as well as miscalculations and administrative errors.

The changes were necessary, the Government explained, because the VAT gap had dropped to an insufficient degree over the period 2021-24, despite considerable progress made on modernizing tax administration.

Specifically, the Government has agreed to reorganize the operations of ANAF and introduce new performance indicators tied to collections; improve insolvency legislation, to boost ANAF's ability to recover tax debts; modernize IT systems and databases and improve tax risk analysis capabilities; improve procedures to strengthen transfer pricing oversight; amend law to strengthen the fight against tax evasion; and increase transparency from the tax agency on progress towards reform.

The Government said: "Negotiations with the European Commission focused on the need to replace an unmet milestone with one where the ambitions are realistic and oriented towards solving problems and achieving the target assumed in 2021, at the time of the NRRP's development."

It added: "Replacing the initial objective with one based on structural measures offers Romania the chance to strengthen the institutional capacity of ANAF and the Romanian Customs Authority (AVR) in the long term, while avoiding the loss of significant funds. This represents a guarantee that fiscal reforms continue within a sustainable framework, agreed with the European Commission, with direct effects on Romania's budgetary stability and credibility in relations with European partners."

Romanian Finance Minister Alexandru Nazare said: "This is an important result for Romania: not only do we avoid losing a significant amount of NRRP grants, but we also strengthen our credibility before the European Commission. The ANAF reform moves forward, with a focus on concrete measures that will bring sustainable results in the collection of budget revenues, and which will lead to the reduction of the VAT gap within a realistic timeline."