The Romanian Senate has significantly amended a bill proposed by the ruling Social Democratic Party, which was designed to reduce VAT on social housing and agriculture. The bill originally proposed a zero-rate on the construction of buildings used for social purposes, such as housing for the elderly, orphanages, and rehabilitation centers. The Senate’s Budget and Finance Committee, however, eliminated this provision on the grounds that it violated Council Directive 2006/112/EC (“the EU VAT Directive”). Instead, the bill passed by the Senate contains only a reduced 5% rate on agricultural products. The elimination of the social housing provision comes at a time when the Social Democratic Party itself is in turmoil, having recently ousted its own Prime Minister, Sorin Grindeanu. The amended bill now passes to the Chamber of Deputies for final approval.
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