Seven EU countries and other European countries outside the EU have already decided to make substantial tax cuts – excise duties and VAT – to limit the impact of the fuel crisis on economies and consumers.

Italy, Portugal, Slovenia, Hungary, Spain were the first EU member states to reduce excise duties on petroleum products, and Ireland recently joined them. In addition, Spain has also reduced the VAT rate on gasoline and diesel from 21% to 10%, says Adina Vizoli, Partner at PwC Romania.

The most substantial excise duty reduction was achieved by Italy, by 30% on both gasoline and diesel, or 20 eurocents per liter (equivalent to 1 leu per liter), while Portugal lowered excise duty levels by 21% on diesel (reductions of 7.6 eurocents per liter), falling below the minimum threshold required by the European Commission.

Poland has also intervened forcefully in the fuel market, after being among the EU countries most affected by price increases. Last Thursday, Prime Minister Donald Tusk announced the reduction of VAT on petroleum products from 23% to 8% and the cutting of excise duties, along with the introduction of maximum selling prices.

Other European countries that have already cut fuel taxes include Serbia, Montenegro, Albania and Iceland. Even the Norwegian Parliament voted last week to lower fuel taxes.

Although some Member States have implemented or announced measures to reduce the VAT rate applicable to fuels, it is important to underline that such measures are not, in principle, in line with European VAT legislation. According to Directive 2006/112/EC on the common system of value added tax, which must be transposed by Member States, reduced VAT rates may be applied exclusively to supplies of goods and services listed in Annex III to the Directive, and fuels are not among these products.

Therefore, in the absence of an explicit derogation granted at European Union level (as was the case, for example, with the zero rates introduced for certain essential products during the SARS‑CoV‑2 pandemic), the application of a reduced VAT rate for fuels contravenes the European legal framework in force and Member States that have introduced such measures risk an infringement procedure by the European Commission.

Romania has the fifth highest excise tax on diesel in the EU (55 eurocents per liter) and the eighth highest excise tax on gasoline (60 eurocents per liter), according to centralized data from the European Commission’s Weekly Oil Bulletin. However, the high deficit limits the options for intervention by reducing taxes.

The government is currently discussing reducing excise taxes, initially only on diesel, according to the latest public statements. An initial reduction of 5% is being considered, which could be extended in stages up to 25%, depending on the evolution of oil prices and pump prices.

Fuel price increases in Romania, in line with those in Europe

The price of diesel in the EU increased by an average of 27.6% between February 26 and March 26, with the highest price increases recorded in Sweden (43%), the Czech Republic (42%) and Poland (40%). At the opposite end, with increases below 10%, are Slovenia, Slovakia and Hungary, according to the latest weekly data published by the European Commission in the Weekly Oil Bulletin. In the case of Slovakia and Hungary, the developments already reflect the excise duty cuts adopted by the two countries. According to the report, Romania reported a below-average increase in the price of diesel in the EU in the last month, of around 20%.

For Euro 95 gasoline, price increases were somewhat more moderate, of 14.9% on average at the EU level and 15.8% in Romania.

Although the increase in fuel prices in Romania has so far been less pronounced than in other European countries, these new price increases come in the context in which the local economy is weakened and continues to face one of the highest inflation rates in the EU.

The current crisis, similar to the one in 2022

The current crisis in fuel prices is not unprecedented. Russia’s invasion of Ukraine caused a similar shock to oil markets, with prices rising for four months. It took about a year to return to near-normal levels.

The difference is that in Romania, price increases have now started at a higher level than in 2022, primarily due to higher taxes (excise duties and VAT) than four years ago. Compared to 2022, excise duties on gasoline and diesel are now higher by over 1 leu per liter.

* Countries that reduced excise duties before 25 March 2026

Source: Weekly Oil Bulletin