Romania will raise its standard VAT rate from 19% to 21%, eliminating previous reduced rates of 9% in favor of a new flat under EUR 120,000 value. However, a transitional measure allows homebuyers to still access the 9% VAT rate for new residential units under 120 square meters and priced below RON 600,000, provided they sign a pre-contract and pay at least 20% in advance by July 31, 2025, with the final sale contract concluded by July 31, 2026. This change reflects a broader trend among Central European countries to streamline VAT systems and reduce tax exemptions. In neighboring Slovakia, the government implemented a VAT increase from 20% to 23% at the beginning of 2025, modifying reduced rates as well. The Czech Republic simplified its VAT system in July 2025 by merging its two reduced bands into a single 12% rate, while also introducing new rules that affect how VAT applies to real estate transactions. Hungary, in contrast, has retained its favorable 5% VAT on new residential units, extending this reduced rate through at least the end of 2026 to support housing affordability. These fiscal adjustments have had mixed effects. In Slovakia and the Czech Republic, higher VAT rates have increased the cost of real estate services, prompting concerns about affordability and sector resilience. Hungary’s strategy to preserve its 5% rate has helped cushion housing prices in a market already grappling with inflation and construction delays. Poland has kept its VAT rates stable but introduced clearer definitions that impact how developers apply VAT to housing, aiming to improve compliance and transparency. In Romania, the upcoming tax increase is expected to have a significant impact on the residential real estate market. Analysts suggest that the higher VAT could raise the total cost of a standard three- to four-room apartment in Bucharest by tens of thousands of euros, making home ownership increasingly difficult for average buyers. Developers are reportedly exploring ways to fast-track transactions to help customers lock in the lower 9% VAT rate before the deadline. However, the new rate could ultimately slow housing demand and shift the focus of development toward rental properties, a trend that has already gained traction in Poland, Hungary, the Czech Republic, and Slovakia over the past decade. Overall, the shift in VAT policy across the region is reshaping housing markets. While the goal is often to increase public revenues and simplify tax systems, the outcome in each country depends on how such changes balance fiscal consolidation with housing accessibility and economic growth. Romania’s decision is in line with regional fiscal tightening but could bring significant challenges unless offset by support mechanisms for both developers and buyers.