European Union

Romanian VAT decrease to 20%

Romania to cut VAT rate

Having raised its VAT to 24%, from 19%, in 2010, making it the 5th highest in the EU, Romania has now committed to bringing back a lower tax rate and are planning to lower their tax rate to 20% in 2016, with a potential of a further 2% decrease to 18% in 2018 if it’s financially viable. Additionally there would be a drop from 24% to 9% for meat, fish, fruit, vegetables and other basic foodstuffs. Whilst this would result in over €2.5b budget impact, it is hoped that the lower rate will help to increase the compliance levels which saw a 3% decrease after the VAT increase was implemented in 2010.

VAT treatment in Monaco and the Isle of Man

Whilst Monaco and The Isle of Man are not part of the EU they are treated as so for the purposes of VAT.

For Monaco Value Added Tax is levied on the same basis and at the same rate as in France, since 1993 an agreement has been in place meaning that French customs regulations apply directly in the Principality of Monaco. French Customs therefore operate the levying of VAT on non EU transactions whereas the Monaco authorities operate the levying on all other transactions. This means that EU member states need to ensure that transactions originating in or intended for Monaco are treated as if they were for France. Companies in Monaco are registered with a French VAT registration number.

The Isle of Man is treated the same as the United Kingdom for VAT purposes, it has the same rate also. This means that goods sent from the UK to the Isle of Man are not treated as exports, and so VAT must be charged at the usual UK VAT rate the same is true for services. Other EU members must treat the Isle of Man the same as if it was to The United Kingdom. Companies in The Isle of Man are given a UK registration number.

They are both incorporated into European customs territory (although remain a third country with regard to the European Union).