Summary
Romania is at risk of losing at least 660 million EUR from its National Recovery and Resilience Plan (PNRR) if it cannot implement a necessary tax reform, according to Marcel Boloș, the Minister of Investments and European Projects. The country is expected to submit the fourth payment request to the European Commission under the PNRR, which totals around 5.7 billion EUR.
Failure to fulfill the tax reform commitment could also lead to the suspension of additional European funds. The European Commission is scheduled to issue recommendations on June 4, 2025, followed by a meeting of EU finance ministers on June 20 to discuss the progression of the matter.
While Romania has made partial progress on the tax reform it committed to in 2021, significant components remain unaddressed. Changes include limiting the micro-enterprise income tax benefits, reducing the revenue threshold from 250,000 EUR starting January 1, 2025, to 100,000 EUR in January 2026 for applicable firms. Large-scale tax incentive adjustments have also been made, notably the removal of benefits for employees in sectors such as IT, construction, agriculture, and the food industry.
However, the property tax reform remains incomplete, with local property taxes expected to increase.
Financial Overview of PNRR
Romania has secured a total of 10.6 billion EUR through the PNRR, from grants and low-interest loans. Nearly 8.3 billion EUR has been spent on various projects, leaving 2.3 billion EUR available for payments to project beneficiaries. Recently, the European Commission suspended 869 million EUR from the third payment request due to six unmet milestones, including:
- Selection of leadership for the Agency for Monitoring and Evaluating the Performance of Public Enterprises (AMEPIP) – 330 million EUR suspended.
- Appointment of professional administrators in 43 companies under the Ministry of Energy – 227 million EUR suspended.
- Issues surrounding the reform of special pensions – 231 million EUR suspended.
Other unmet milestones relate to metro projects in Cluj and Bucharest.
Romania has until November 28, 2025, to rectify some of these missed milestones to recover suspended funds. The total allocation under the PNRR for Romania amounts to 28.5 billion EUR, comprising 13.6 billion EUR in grants and 14.9 billion EUR in loans. Currently, the potential loss due to slow project implementation stands at approximately 11.9 billion EUR.
In summary, Romania must address these fiscal reforms and milestones to secure vital European funding essential for its economic recovery and resilience.
