Taxes

Tax reform 2027: Changes to leave, VAT on utilities, and new real estate rules

In the first part of our analysis, we examined how the 2027 tax reform will affect entrepreneurs, freelancers, and business tax regimes. However, the package of proposals prepared by the Ministry of Finance is much broader. Higher VAT on utilities and food products, new taxation rules for real estate transactions, changes to salary calculation, and a possible revision of the annual leave calculation method will all directly affect both businesses and their employees. In this article, we examine these changes in detail.

Source: Draft Tax Policy for 2027, published by the Ministry of Finance of the Republic of Moldova on June 11, 2026 (mf.gov.md); official statement of the Government of the Republic of Moldova (gov.md).

Utilities and food products: VAT will increase to 20%

Perhaps the most noticeable change for ordinary citizens is the unification of the VAT rate. At present, Moldova applies reduced VAT rates: 8% for natural gas, food products, medicines, and several other categories of goods, while electricity and heating are subject to a 0% VAT rate. The draft proposes introducing a single standard VAT rate of 20%.

What does this mean in practice?

Utility bills. VAT on natural gas will increase from 8% to 20%, with the change scheduled to take effect on April 1, 2027. VAT on electricity and heating will also increase from 0% to 20%. As a result, consumers will inevitably see higher utility bills. At the same time, the 0% VAT rate for cold water, hot water, and sewage services will remain unchanged, as these services are not included in the reform.

Food products. The proposal eliminates the reduced 8% VAT rate for livestock, crop, and horticultural products, as well as sugar produced from sugar beet, increasing the rate to 20%. Economists warn that retail prices for these categories could rise by 20–30%. The Ministry of Finance believes that the impact will be offset by reductions in other taxes, although the actual effect on consumers may vary.

Medicines. The reduced 8% VAT rate for medicines and immunological products is also expected to be abolished. The draft proposes applying the standard 20% VAT rate starting in January 2027.

Hotels and restaurants. The HoReCa sector (hotels, cafés, and restaurants) will also be subject to the standard 20% VAT rate instead of the current reduced rate. This will increase operating costs and is likely to result in higher prices for customers.

Online shopping. Currently, international parcels valued at up to €150 benefit from preferential tax treatment. The draft proposes extending VAT to these purchases as well in order to create equal tax conditions for foreign online platforms and local retailers.

The reform will be implemented in stages: October 2026 – food products, public catering, and e-commerce; January 2027 – medicines, vehicles, and accommodation services; April 2027 – energy resources.

New excise duties: soft drinks, electronic cigarettes, and fireworks

Alongside the VAT reform, the draft law introduces new excise duties on several categories of products. Excise taxes will apply to:

liquids for electronic cigarettes (vapes);
carbonated beverages containing sugar or sweeteners;
pyrotechnic products.

The proposal also includes an increase in excise duties on diesel fuel, particularly affecting the transport and logistics sectors. This will indirectly increase delivery costs and, consequently, the prices of almost all categories of goods.

Salaries: lower income taxes and a new salary calculation structure

The reform proposes a significant reduction in the tax burden on salaries. This is arguably the most favorable part of the reform for employees.

Personal income tax will decrease from 12% to 7% for individuals whose annual income does not exceed 1 million MDL. Income exceeding this threshold will be taxed at 15%.

The mandatory health insurance contribution will decrease from 9% to 7%.

Social security contributions. Part of the mandatory social insurance contribution is proposed to be transferred directly to employees, reducing the total contribution rate to approximately 21%.

The personal allowance will be abolished but replaced with a direct payment. Currently, every officially employed individual benefits from a personal tax allowance (approximately MDL 297 per month). The reform proposes abolishing this allowance and replacing it with direct monthly payments: MDL 500 per month for every officially employed individual; an additional MDL 200 per month for each minor child.

The concept of gross salary will also change. At present, gross salary refers to the amount before employee taxes and contributions are withheld but already includes the employer's social contributions. Starting in 2027, gross salary is proposed to represent the total amount before the payment of any taxes or contributions, similar to the model introduced in Romania in 2018. Employers will be legally required to adjust gross salaries so that employees' net salaries do not decrease.

Once the law is adopted, companies will have very little time to adapt. At FlagMAN-D, we continuously monitor the legislative process and are ready to help your business understand and implement all changes immediately after they come into force.

Leave: a new calculation method

In addition to tax changes, a labor law reform is also being discussed in 2026 that will directly affect employees' annual leave entitlements. The proposal concerns amendments to Article 113 of the Labor Code, replacing the current calculation of annual leave in calendar days with a calculation based on working days.

At present, every officially employed individual is entitled to a minimum of 28 calendar days of paid annual leave (excluding public holidays). This provision is established by Article 113 of the Labor Code of the Republic of Moldova and has been in force for more than 20 years.

The proposed calculation is as follows:

20 working days for employees working a five-day workweek;
24 working days for employees working a six-day workweek;
16 working days for employees working a four-day workweek.

The formula is based on the Romanian Labor Code. According to the authors of the proposal, the reform does not reduce the length of annual leave but merely changes the method used to calculate it.

However, many experts disagree with this interpretation. In their opinion, the actual amount of rest time will decrease because Saturdays, for employees on a five-day workweek, will no longer be counted as leave days. Furthermore, amending Article 113 would require changes to at least ten related legislative acts, making the implementation of the reform considerably more complex.

Important: As of June 2026, this amendment remains only a proposal and has not yet been adopted into law. It is currently undergoing public consultations and may still be amended or rejected.

Real estate: selling an apartment may become taxable

The proposed changes affecting the real estate market are among the most sensitive aspects of the reform for individuals.

Capital gains tax on the sale of residential property. Currently, income from the sale of a person's only residence is exempt from taxation. Under the draft reform, this exemption would apply only to capital gains of up to MDL 1 million (the difference between the purchase price and the selling price). If the property's value has increased by more than this amount, the portion of the capital gain exceeding MDL 1 million would be taxed at 15%.

There is, however, an important detail. When calculating the capital gain, the State Tax Service will not accept ordinary cash receipts for renovation work as proof of investment. Only tax invoices and official contracts with contractors will be recognized. This means that renovation work carried out informally and paid for in cash cannot be included when calculating the taxable amount.

Capital gains tax will more than double. Currently, the 12% tax rate applies only to 50% of the capital gain, resulting in an effective tax rate of approximately 6%. Under the new proposal, a 15% tax rate would apply to the entire capital gain. This change would affect the sale of all types of assets, including shares and other investment assets.

Renting residential property to legal entities. For individuals who rent out apartments or houses to legal entities, the income tax rate would be reduced from 12% to 7%. This is one of the few tax relief measures included in the reform for property owners.

Property tax will have a maximum limit. At the same time, the draft establishes a cap on property tax: it may not exceed 1% of the property's value. This measure is intended to prevent potential abuse by local public authorities.

VAT on residential property purchases. The proposal also introduces a 20% VAT rate on the sale and rental of newly built residential properties. This measure could significantly increase the final price of apartments in new developments. The Union of Real Estate Agencies of the Republic of Moldova has already stated that such a change could lead to a substantial increase in housing prices.

Passive income: deposits, dividends, and money transfers

The proposed changes will also affect individuals who earn income from bank deposits, investments, or monetary gifts.

Dividends and interest on bank deposits. The tax rate on these types of income will increase from 6% to 7%. At first glance, the change may seem minor, but together with the other measures included in the reform, it will affect the overall return on savings and investments.

Investment income. Income generated from investments (crowdfunding, corporate bonds, and other financial instruments) will be taxed at 15%, instead of the current 12%.

Cash gifts and donations. At present, individuals generally do not pay tax on monetary gifts they receive. The draft proposes introducing taxation of such income, except for transfers between spouses and first-degree relatives (parents and children).

The FlagMAN-D team will be ready to analyze your specific situation as soon as the law is adopted in its final version.

Vehicles: buying a car will become more expensive

The draft proposes introducing a 20% VAT rate on the import and purchase of vehicles. Previously, this category benefited from preferential tax treatment. The increase is scheduled to take effect in January 2027. For those planning to purchase a vehicle within the next six months, this provides a strong incentive to complete the purchase before the new VAT rate comes into force.

Maternity and social benefits: possible changes

The reform may also affect the calculation of social benefits. In particular, the impact of the new salary contribution structure on sick leave benefits and maternity benefits is currently being assessed. Maternity benefits are calculated based on an employee's official gross salary, and, as mentioned earlier, the methodology for calculating gross salary is expected to change. For some women who do not have sufficient officially declared employment history or who receive a significant portion of their salary unofficially, the new calculation method may affect the amount of maternity benefits they receive.

The overall balance of the reform: what will decrease and what will increase

The reform cannot be assessed in a purely positive or negative way. It reduces certain taxes while increasing others.

Taxes that will decrease:

personal income tax on salaries: from 12% to 7% (for annual income up to MDL 1 million);
mandatory health insurance contribution: from 9% to 7%;
income tax on residential property rented to legal entities: from 12% to 7%;
corporate income tax on reinvested profits: 0% (instead of 12%).

Taxes that will increase:

VAT on natural gas, electricity, and heating: from 0–8% to 20%;
VAT on food products: from 8% to 20%;
VAT on medicines: from 8% to 20%;
VAT on vehicles, newly built residential property, and rental services: a new standard rate of 20% will apply;
capital gains tax: from an effective rate of approximately 6% to 15%;
tax on dividends and bank deposit interest: from 6% to 7%;
tax on investment income: from 12% to 15%.

What you should do now

Although the reform has not yet been adopted in its final form, some decisions are worth considering in advance.

If you are planning a major purchase—such as a vehicle, a newly built home, or household appliances—it is advisable to consider completing the purchase before the new VAT rates take effect.

If you plan to sell an apartment, evaluate whether your capital gain will exceed MDL 1 million and prepare all supporting documentation for renovation and improvement expenses in advance, including official contracts and tax invoices issued by contractors.

If you are an employer, begin preparing for changes to payroll calculations. The new gross salary formula will require updates to employment contracts, payroll systems, and internal accounting procedures.

If you earn income from investments or bank deposits, take the upcoming tax rate changes into account when planning your financial strategy for 2027.

To stay informed about the progress of the draft law, regularly consult the official sources: Ministry of Finance of the Republic of Moldova; State Tax Service.

This article is provided for informational purposes only and is based on the Draft Tax Policy for 2027, published by the Ministry of Finance of the Republic of Moldova on June 11, 2026. All provisions described in this article are proposals contained in the draft law and are not currently in force. The final version of the law may differ significantly from the current draft. For the most up-to-date and legally binding information, please refer to the official sources published by the competent authorities.

FlagMAN-D

2026-06-26 18:00