Romania risks the suspension of all European money

The tax reform requested by the European Commission by June, which also involved tax increases, could be postponed due to the limitations of the interim government. The measure had already been postponed previously, for electoral reasons. A new delay could have serious consequences. Government sources warn that Brussels could consider suspending all European funds – both from the PNRR and from cohesion policy, until the reform is ready, Digi24 says.

The European Commission has asked the Romanian state to come up with fiscal changes, which would on the one hand adjust taxation, but also increase collection to the state budget, so that Romania can get rid of the burden of a huge budget deficit. The first deadline – April 2025. However, the executive postponed any unpopular measure until the completion of the presidential elections, and the new deadline was until the summer. More precisely, June, with application from 2026.

The interim government cannot come up with draft laws or Emergency Ordinances, so the tax reform will be postponed again. A critical point for the Executive, say government sources, because we risk the suspension of all European funds.

“The conclusion of new legal commitments is suspended and the procedure for proposing to the Council to suspend the funds follows,” states the agreement concluded with the Commission.

At stake are over 45 billion euros from the cohesion funds for the period 2021–2027, to which are added the 19 billion euros remaining from the PNRR. The situation in which our country finds itself was discussed today, including at the Victoria Palace, between Marcel Boloș, Minister of European Funds, and Cătălin Predoiu, interim prime minister.

If it comes to blocking European money, this will come gradually and only after additional negotiations with European officials, say voices in the Government. But it would be a blow to our country’s image on international markets.

According to political sources, a first version of the tax reform has already been agreed at the political level. Including with former Prime Minister Marcel Ciolacu. Among the measures discussed are the increase in VAT to 21%, despite the fact that the Government has repeatedly denied it, but also a new increase in the dividend tax. This after the taxation of dividends increased once again, at the end of last year, from 8 to 10%. Changes are also being discussed regarding property taxes and income tax. Another option to bring money to the state budget – increasing the price of roviniete, with effect from 2026. For normal cars, they could increase by up to 40%, while for trucks up to six times. Despite the pressure, the Government hopes to negotiate an extension of the calendar, until a Cabinet with full powers is installed.

The Minister of European Funds, Marcel Boloș, was scheduled to travel to Brussels at the end of this week to renegotiate Romania’s National Recovery and Resilience Plan (NRRP) with the European Commission. However, discussions have been postponed at the request of Romanian authorities due to the ongoing political crisis—an additional setback on a key reform issue for the current interim government. The European Commission had requested the final version of the NRRP by the beginning of this month.

“We know an interim government cannot adopt laws or emergency ordinances. The mandate we need for the renegotiation must be approved via a memorandum, which we will present to the Government tomorrow so that MIPE can continue its renegotiation mandate,” Boloș stated at Victoria Palace after a meeting with the interim prime minister. “The fiscal reform issue must be clarified, as the continuation of the NRRP implementation depends on it.”

When asked whether the June deadline could still be met, Boloș deferred responsibility: “The Ministry of Finance can answer that.”

Environment Minister Tanczos Barna also said the next government would need to launch a debate on the issue: “Fiscal reform is a commitment Romania has made both to the European Commission and to international financial institutions. After the elections, the new government must certainly begin a public debate on revenue consolidation and this fiscal reform,” he said at the Romanian Business Leaders Summit.