Romanian Govt Adopts Application Norms To Decree Fighting Tax Evasion

The decree, published in the country's Official Journal late June, states the Government will shut down duty-free shops, extends the powers of the Financial Guard and Customs Authority, sets prison terms as penalty for individuals crossing the Romanian border who fail to declare amounts over EUR10,000.

The Government had initially planned to apply VAT on intra-EU trade and reintroduce excises on luxury items, but eliminated these provisions after the European Commission warned they breached EU rules and threatened infringement.

Prime Minister Emil Boc said the application norms maintain a reduced VAT for several types of services.

Boc said a 9% VAT will apply to services regarding access to castles, museums, memorial houses, fairs, cultural events, cinemas, to services regarding book, paper, magazine, orthopedic product and medicine deliveries, as well as for hotel accommodation services.

The prime minister added that a 5% VAT will apply to a series of transactions, such as selling homes with areas not exceeding 120 square meters, transactions of shelters for the elderly and children, rehabilitation centers for teenagers with disabilities. A 5% VAT will also apply to transactions which regard selling buildings and the land on which they were constructed to mayoralties to use them for social purposes.

Romanian authorities have recently hiked the VAT by 5 percentage points, to 24% from 19%, in a move to increase budget revenues.

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