Through harsh austerity measures, Romania has saved less than half of what it could save by bringing its VAT revenue up to the EU27 level.

Romania has by far the largest VAT collection gap in the European Union: the difference between what it should collect in VAT and what it actually collects is 30% in 2023, well above Poland (16%), Hungary (7.4%), Bulgaria (8.6%) and the EU27 average (9.5%).

Our country not only has the largest budget deficit in the EU, but also one of the lowest budget revenue rates in the EU as a percentage of GDP, surpassed only by Ireland. This massive gap erodes the budget revenue base, limiting the state's ability to finance essential areas such as education, health, and defense.

Romania's situation contrasts sharply with the EU27 average, where the VAT gap has fallen to 9.5% from 11.1% in recent years, while in Romania it has not fallen below 29%. Reducing the gap from 30% to 9.5%, which is the EU27 average, would bring in 1.4% of GDP in additional revenue, enough to cover the difference between Romania's spending on education and the European average, more than half the difference compared to EU27 allocations for health, or almost double the Romanian defense budget. Full VAT collection would increase the collection rate by 2% of GDP, comparable to the national budget for education and more than that for defense in 2023.

This difference perpetuates a vicious circle: much lower than potential budget revenues, a record budget deficit of 6.6% in 2023 and 9.3% in 2024, the imposition of austerity measures that affect low-income citizens, and the state's inability to finance public services at an optimal level.

The impact on the public budget is significant, as closing the gap to the EU collection level on 2023 expenditures would generate more money than all the austerity measures adopted by the Bolojan Government, according to the estimate of the Fiscal Council in October 2025. This would bring Romania's budget deficit close to the level of Poland and France.

This problem can only be overcome through coordinated interventions in tax collection, the digitization of the National Agency for Fiscal Administration (ANAF), and a tax compliance strategy with clear targets. In the years 2000-2010, Bulgaria was in an even worse situation than Romania in terms of VAT collection. Today, its VAT gap has fallen to 4.9%, below the EU average and almost 10 times lower than that of Romania. By adopting similar measures, Romania could significantly increase its VAT revenues in the coming years, thus avoiding further shock austerity measures and aligning itself with European standards for spending on education, health, and even defense.

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Data source:

• Eurostat - https://taxation-customs.ec.europa.eu/taxation/vat/fight-against-vat-fraud/vat-gap_en#vat-gap-in-the-eu--report-2024
• Eurostat - General government expenditure by function (COFOG) [gov_10a_exp__custom_19204764]

Data processing and text design: Dani Sandu

Infographic: Pascalone Media SRL

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