Romania has recently enacted legislation providing that as of 1st June 2019, the VAT rate applicable to certain supplies of food will be lowered to the reduced 5% VAT rate.
The 5% rate of VAT will apply to food supplies certified by the government as alpine products, organic products or traditional products. Currently, these food supplies are generally subject to Romanian VAT at the 9% reduced rate.
The Romanian government has introduced this measure as a matter of policy to encourage people to eat more healthily. However, because applying reduced VAT rates for this purpose has no basis in EU law, it’s anticipated that the European Commission’s response will be to send Romania a letter of formal notice.
If you believe these developments impact your business and would like further advice on your next steps, please do get in touch.