Romania Dropped Intra-EU Trade VAT Lest It Should Endanger EU Loan Tranche – Fin Min

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"The EU warned us that, by introducing a VAT on intra-EU trade, as well as a reverse taxation, we could endanger the new loan tranche," said the minister, adding that the reverse taxation might be applied only based on the Council of Europe's approval.

Romania's emergency decree aiming to fight tax evasion, which drops plans to apply VAT on intra-EU trade and reintroduce excises on luxury items, entered force last week after it was approved by the Government and was published in the Official Journal.

People close to the matter told MEDIAFAX the Government decided to drop plans to apply VAT on intra-EU trade and reintroduce excises on luxury items after the European Commission warned the measures breach EU rules and threatened infringement. The emergency decree keeps the plan to set up a "Registry of intra-community agents" as of August 1.

Romania signed a EUR20 billion aid package with the International Monetary Fund, the EU, the World Bank and other foreign lenders. So far, the country received around EUR9.2 billion from the IMF and is scheduled to get another EUR850 million pending IMF board's approval. Romania should also receive EUR1.15 billion from the European Commission in September.