Lower VAT rates for the Romanian tourism industry

On November 1, Romania cuts the VAT rate on tourism services from 9 to 5%

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Corina Cristea, 29.10.2018, 13:47

Described by foreign websites as one of Europe’s most mysterious and beautiful countries, Romania is a highly recommended tourist destination. The Italian daily paper Corriere della Sera writes that Romania offers excellent food at small prices and boasts beautiful places where tourists can enjoy special experiences, from Transylvania’s castles to the Turda Salt mine, where a panoramic lift takes you 14 floors under the surface.

Apart from Bucharest, which is famous for the Palace of Parliament and its nightlife, some of the most often mentioned tourist attractions include Peleş Castle, the former summer residence of the Romanian kings or Bran Castle, which attracts an increasingly larger number of tourists every year, mostly because its name has been linked to Bram Stoker’s novel, Dracula. The Sighisoara medieval citadel, Decebalus’ sculpture at Cazanele Dunarii (Danube’s Cauldrons), the fortified evangelical church in Biertan, Sibiu County, the Orthodox monasteries in Moldavia, the Transfăgărăşan high road and Maramureş are other attractions highly appreciated by those who choose to visit Romania.

The number of foreign tourists is growing and this upward trend might gain ground following the line authorities’ decision to cut the VAT rate on tourist services from 9 to 5%, as of November 1. The economic measure adopted by the government to take effect in early November is meant to boost tourism and reduce tax evasion. VAT rates will be cut for the hospitability industry, including some collateral sectors, for instance renting plots of land for camping sites.

Restaurant and catering services, including beer sales, with the exception of alcoholic drinks, will benefit from the same VAT cut. All activities related to the leisure industry, including access to amusement parks, as well as other facilities to practice sports, such as fitness rooms, will benefit from the same cut. The VAT rate is currently standing at 19% in this sector.

Thermal and mineral water royalties in the spa sector will also be eliminated, and consequently, of all sectors of the economy, the tourism industry will benefit from the lowest VAT rate as of November 1. Although the bill does not refer to intermediary travel package services, but to the direct accommodation in a hotel we believe that holidays in Romania will be cheaper, says the President of the Employers’ Organisation of Romanian Hotels and Restaurants, Dragoş Petrescu. In an interview on Radio Romania, the first vice-president of the National Association of Travel Agencies, Alin Burcea, is however sceptical about the fact that the Romanians will enjoy cheaper holiday packages in the country, but he says the measure will certainly produce effects in the effort to contain tax evasion.