Case Study
A Romanian real estate developer (VAT and corporate tax payer) concludes:
- January – February 2025: bilateral sale-purchase promises for apartments, with no invoices issued and no down payments received until now. Advance invoices will be issued in August 2025.
- June 2025: bilateral promises with partial payment received, applying the reduced VAT rate of 9% to the advance.
Question: Which VAT rate applies in each case?
- Promises signed in January – February 2025, advances received from August 2025
According to Article 291(1) and (4) of the Fiscal Code, the applicable VAT rate is the one in force at the date of VAT chargeability. For advances, under Article 282(2)(b), VAT becomes chargeable at the date the advance is received.
Therefore, for advances collected from August 2025 onwards, the standard VAT rate of 21% applies, regardless of when the promise was signed. - Promises signed in June 2025, partial advance paid at 9% VAT
Although a reduced VAT rate of 9% was applied to the advance, the same rate cannot be applied at the final delivery of the apartment, because the transitional measure requirements from Article III of Law no. 141/2025 are not fully met:
- The promise was not concluded between 3 July – 31 July 2025;
- At least 20% advance (excluding VAT) was not paid by 31 July 2025.
Without meeting these cumulative conditions, the general rule from Article 291(4) applies: the VAT rate is the one in force at the delivery date (property title transfer).
Important Note
The transitional measure (reduced VAT 9% until 31 July 2026) only applies when all legal requirements are cumulatively met regarding floor area, value of the property, single acquisition condition, minimum advance, and timing of the legal act.