VAT rates in Europe - what can be distinguished?

Service-Tax

Although the value added tax system is regulated by one EU act, the amount of VAT rates applicable in the European Union varies. Polish entrepreneurs supplying goods and providing services in the EU should be aware of the VAT rates in a given country in order to be aware of the possible tax burden they may face. What are the VAT rates in Europe? We answer in the article.

VAT rates in Europe and the purpose of the EU directive

The purpose of establishing the EU Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax was to harmonize the VAT system throughout the European Community. This process did not comprehensively cover VAT rates, which means that each member state has some freedom in determining the amount of VAT rates. As we read in point 29 Preambles to the Directive:

"The standard rate of VAT currently in force in individual Member States, combined with the mechanism of the transitional system, ensures an acceptable functioning of this system. In order to avoid that differences in standard VAT rates applied by Member States lead to structural imbalances within the Community and to distortions competition in certain sectors of activity, a minimum standard rate of 15% should be fixed, subject to review at a later date. "

The VAT Directive in Art. 96 provides that Member States shall apply a standard rate of VAT which is determined by each Member State as a percentage of the tax base and which is the same for supplies of goods and services. The basic rate may not be less than 15%.

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Moreover, in Art. 98 above the act specifies that Member States may apply one or two reduced rates. The reduced rates shall apply only to the supply of goods and services, the categories of which are set out in Annex III. Reduced rates do not apply to services provided electronically. When applying reduced rates to specific categories of goods, Member States may use the Combined Nomenclature to define precisely the scope of that category. Reduced rates are defined as a percentage of the tax base, which cannot be lower than 5%.

What are the VAT rates in Europe?

The table below presents a list of VAT rates in the EU member states:

Country

Basic VAT rate

Reduced VAT rate

great Britain

20%

5%, 0%

Austria

20%

13%, 10%

Belgium

21%

12%, 6%, 0%

Bulgaria

20%

9%

Cyprus

19%

9%, 5%

Czech Republic

21%

15%, 10%

Denmark

25%

-

Estonia

20%

9%

Finland

24%

14%, 10%

France

20%

10%, 5.5%, 2.1%

Greece

24%

13%, 6%

Spain

21%

10%, 4%

the Netherlands

21%

9%

Croatia

25%

13%, 5%

Ireland

23%

13.5%, 9%, 4.8%, 0%

Lithuania

21%

9%, 5%

Latvia

21%

12%, 5%

Luxembourg

17%

14%, 8%, 3%

Malta

18%

5%, 7%, 0%

Germany

19%

7%

Poland

23%

8%, 5%

Portugal

23%

13%, 6%

Romania

19%

9%, 5%

Slovakia

20%

10%

Slovenia

22%

9.5%

Sweden

25%

12%, 6%, 0%

Hungary

27%

18%, 5%

Italy

22%

10%, 5%, 4%

Therefore, as can be seen in the presented table, VAT rates in Europe are varied - currently the lowest VAT rate is in force in Luxembourg. On the other hand, the country where the amount of the liability is the highest is Hungary. The group of countries where the VAT rate is lower than 20% includes: Cyprus, Malta, Romania and Germany. The same standard rate as applied in Poland, ie 23%, is also applied in Portugal and Ireland.