Revelations behind the negotiations with the European Commission on one of the measures with which the Government believes it will reduce tax evasion: “It would rather be a surprise if they accept”
Romania is in full negotiation process with the European Commission for the introduction of the VAT reverse charge mechanism for vegetables, fruits, clothing and footwear, these being sectors considered to be at high risk of fraud. But the chances that the Brussels authorities will authorize this mechanism requested by Romania to reduce tax evasion are quite low, government sources told HotNews. According to them, it would be “rather a surprise” to approve the reverse charge for the four domains.
On August 21, 2025, Romania officially submitted to the European Commission a request for derogation from Article 193 of Directive 2006/112/EC on the common system of VAT, requesting the authorization of the application of reverse taxation for supplies in these areas, the Ministry of Finance submitted at the request of HotNews.
The mechanism assumes that the VAT payment obligation is transferred from the supplier to the beneficiary, thus reducing the risks of tax fraud. It is a measure that the authorities consider essential to combat tax evasion and significant VAT losses in these sectors.
Why there is a risk that Brussels will object
“We are skeptical that we will receive a favorable response from the European Commission”, stated government sources.
“The position of the Commission is very tough, in the discussions they said that they no longer want to grant reverse charges”, the quoted sources also stated. According to them, one reason is that Romania already benefits from this mechanism for some products, for several years.
Romania already applies, temporarily, until December 31, 2026, reverse taxation for several sectors with a high risk of fraud: the delivery of waste, for wood material, the delivery of real estate, greenhouse gas certificates, cereals, electricity and natural gas, mobile phones, laptops, game consoles.
When the decision will be made
The deadline for resolving the request is eight months from the date of its receipt by the European Commission, according to European provisions. Thus, a decision will be taken during 2026, the Ministry of Finance reported. The eight months expire this spring.
Asked if the mechanism could be introduced this year itself, the Ministry of Finance states that it cannot anticipate the position of the European Commission. According to the procedure, the Commission must either present to the Council of the European Union a proposal for the approval of the derogation, or, in the case of a refusal, formally communicate its objections.
Even in the scenario of a favorable opinion from the Commission, the implementation of reverse taxation in Romania depends on the approval of the Council of the European Union, a mandatory step before the measure can be transposed into national legislation.
In which sectors does reverse taxation still apply in Romania and until when
In Romania there are discussions about the generalized application of reverse charge for VAT, one of its supporters being the lawyer Gabriel Biriș. These discussions take place under the conditions in which Romania has the largest VAT collection deficit in the European Union, thus – the so-called VAT gap. According to Commission data, Romania's VAT collection deficit is around 30%, while the average in the EU is 9.5%.
Romania cannot apply generalized reverse charge without the approval of the Commission. However, the European Union's VAT rules do not provide for the widespread application of reverse taxation, but only in specific areas where there is a high risk of fraud.
The Commission may allow special derogations which must be justified as temporary and strictly necessary measures. Thus, at the European level, reverse charge is seen as an emergency tool, not as a lasting solution.
What is reverse charge
Reverse charge is a special VAT application mechanism whereby the obligation to pay VAT does not fall on the seller, but on the buyer, i.e. the beneficiary, unlike the regular charging system. Normally, the seller invoices the VAT, collects the VAT from the customer, then remits it to the state.
The reverse charge mechanism is a measure that transfers the responsibility for the final payment of VAT to the state budget from the seller to the customer.
“Reverse taxation is a way of simplifying the payment of value added tax. With this, no VAT payment is made between the supplier/provider and the beneficiary of deliveries/services, the latter owing, for the operations performed, the tax related to the inputs and having the possibility, in principle, to deduct said tax”, according to an ANAF document.
Reverse taxation is considered useful in eliminating ghost company and carousel frauds, as the mechanism by which the collected VAT is stolen disappears. “It's as if you have a pipeline through which a lot of money circulates, which some people broke through and stole. Reverse taxation is like a valve that closes the pipeline. Only accounting records circulate”, explained Gabriel Biriș in an interview for HotNews.
