European countries - VAT Rates Guide

Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution. It is a crucial source of revenue for many European countries, both within the European Union (EU) and outside it. In Europe, VAT rates can be classified into three categories:

• Standard rates (for most goods and services)

• Reduced rates (for essentials like food and medical supplies)

• Super-reduced rates or zero rates (for specific items like newspapers and books)

The history of the harmonized EU VAT system began with the European Economic Community (EEC) in 1957. The first directive harmonizing VAT within the EEC was adopted in 1967 to replace turnover taxes and establish a standard VAT system. Despite numerous directives and regulations introduced to standardize VAT rules and ensure the smooth functioning of the single market, differences among Member States still exist, making it essential for businesses and individuals to stay informed about the varying VAT rates and regulations.

This guide to VAT rates in Europe outlines basic rules under the VAT Directive and provides examples of VAT rates in EU and non-EU countries.

VAT Rates Across Europe

VAT Rates in EU Member States

The EU VAT Directive sets the general framework for VAT rates in the EU. Within this framework, each Member State sets the VAT rates and categories of supplies to which each rate applies. However, the standard rate must be at least 15%. Since April 2022, EU countries can apply up to two reduced rates, as low as 5%, to specified goods and services, and one super-reduced rate below 5% to essential items.

Austria VAT Rates

• Standard rate - 20% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 13% - Applies to many standard products or services, such as food and drink, agricultural products and services, medicines, books, and daily newspapers

• Reduced rate - 10% - Applies to the import of particular items, the delivery, purchase, import, and installation of solar modules and storage components for food, books, newspapers, and magazines; rental for residential purposes, passenger transport; accommodation services

• Zero rate - 0% - Applies to the intra-community supply of goods, export to non-EU countries, and international transport of passengers

  • Special reduced rate for specific regions - 19% - Standard rate for regions Jungholz and Mittelberg

Belgium VAT Rates

• Standard rate- 21% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 12% - Applies to restaurant and catering services; photo pharmacy products

• Reduced rate - 6% - Applies to different kinds of food products, agricultural services, transportation services, and granting of the right to access cultural, sporting, and entertainment facilities

• Zero rate - 0% - Applies to intra-community supplies; newspapers and periodical publications appearing at least 48 times per year, except for articles published online; and recycled products.

Cyprus VAT Rates

• Standard rate - 19% - Applies to all taxable supplies in the country, besides those VAT-exempted

• Reduced rate - 9% - Applies to accommodation services, restaurant and catering services, transport of passengers 

• Reduced rate - 5% - Applies to entry fees to theaters, cinemas, sports events, amusement parks, and similar cultural events, and bottled water

• Super reduced rate - 3% - Applies to books, newspapers, magazines, medicines

• Zero rate - 0% - Applies to intra-community supply of goods, export of goods to non-EU countries

Germany VAT Rates

• Standard rate - 19% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 7% - Applies to the granting, transfer, and exercise of rights arising from copyright law, the transport of people with taxis and trains, admission to specific cultural venues such as theaters, concerts, and museums, and  films

• Zero rate - 0% - Applies to the import of particular items, the delivery, purchase, import, and installation of solar modules and storage components for specific  photovoltaic systems

Denmark VAT Rates

• Standard rate - 25% - Applies to all taxable supplies in the country, besides those that can be VAT-exempted

• Zero rate - 0% - Applies to intra-community supply of goods, export of goods to non-EU countries

  • Even though Denmark consists of three parts: Denmark, Greenland, and the Faroe Islands, Greenland and the Faroe Islands are self-governing regions that are not subject to Denmark's VAT rules

Greece VAT Rates

• Standard rate - 24% - Applies to all taxable supplies in the country, besides those that can be VAT-exempted

• Reduced rate - 13% - Applies to accommodation services, restaurant, and catering services

• Reduced rate - 6% - Applies to books, newspapers, magazines, medicines

• Super reduced rate - 4% - Applies to contract-based works that are solely connected with the removal of architectural barriers that hinder the mobility of persons with disabilities in private or public buildings or buildings of public interest

• Zero rate - 0% - Applies to intra-community supply of goods, export of goods to non-EU countries

  • Special reduced rate for specific regions - a standard rate of 17%, and reduced VAT rates of 9% and 4% - The Aegean Islands of Leros, Lesvos, Kos, Samos, and Chios

Spain VAT Rates

• Standard rate 21%, Canary Islands 7% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 10% - Applies to food, accommodation, and  catering services 

• Reduced rate - 4% - Applies to essential food, books, or medicines

• Zero rate - 0% - Applies to the intra-community supply of goods, export, health care, or educational services

Finland VAT Rates

• Standard rate - 25.5% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 14% - Applies to groceries, food, and restaurant and catering services

• Reduced rate - 10% - Applies to books, newspapers, and magazines (print and electronic publications), pharmaceutical products, sports, and fitness services, entrance fees to cultural, entertainment, and sporting events, passenger transport services, and accommodation services

• Zero rate - 0% - Applies to exports outside the EU, sales of goods within the EU to VAT-liable buyers, and other tax-exempt sales of goods and services relating to international trade, such as the transport of passengers or goods by direct flight outside the EU

France VAT Rates

• Standard rate - 20% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 10% - Applies to certain accommodation services; entrance fees to museums, zoos, monuments, thermal establishments, passenger transport

• Reduced rate - 5.5% - Applies to books in any medium; most food products

• Reduced rate - 2.1% - Applies to medicines

• Zero rate - 0% - Applies to an exhaustive list of financial services; Intra-Community supply; Export to non-EU countries

• Special reduced rate for specific regions: 

  • For Corsica: rate 13% on oil products; rate 10% on construction works, sales on farm machinery, sales on eaten-in products, etc.; rate 2.1% (reduced rate), rate 0.9% on sales of live animals to non-subject to VAT entities, and on the first performances or circus

  • In Martinique, Guadeloupe, and Réunion, the standard is 8.5%, the reduced rate is 2.1%, and the super reduced rate is 1.05% (for the press)

Italy VAT Rates

• Standard rate - 22% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 10% - Applies to electricity for domestic use, accommodation services, access to theatrical performances of any kind

• Reduced rate - 5% - Applies to urban passenger transport services carried out using means of transport authorized to carry out sea, lake, and river transport services

• Reduced rate - 4% - Applies to fresh milk for retail sale, butter, cheese, and dairy products, newspapers and daily news bulletins, orthopedic devices

• Zero rate - 0% - Applies to exports, operations with San Marino and Vatican City, and intra-community supply

Lithuania VAT Rates

• Standard rate - 21% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 12% - Applies to tto long-term accommodation services, cultural events, and passenger transport services

• Reduced rate - 5% - Applies to printed books and e-books, printed and electronic versions of non-periodicals, like manuals

• Zero rate - 0% - Applies to the supply of goods leaving the EU, supply of goods to another Member State, insurance and financial services linked to the export of goods

Luxembourg VAT Rates

• Standard rate - 17% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 14% - Applies to limited financial services, wine fermentation, and cleaning products

• Reduced rate - 8% - Applies to flowers, domestic fuels, electricity, motor fuel

• Super reduced rate - 3% - Applies to essential foods, cultural event entrance, passenger transport, restaurant services, medical equipment, children's clothing, copyright, specific agricultural inputs, books and journals, domestic energy sources

• Zero rate - 0% - Applies to Intra-community passenger travel by air and sea, exports, and intra-community supplies of goods

Netherlands VAT Rates

• Standard rate - 21% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 9% - Applies to many standard products or services, such as food and drink, agricultural products and services, medicines, books, daily newspapers, and magazines

• Zero rate - 0% - Applies to intra-community supply, export from the Netherlands to non-EU countries

Poland VAT Rates

• Standard rate - 23% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 8% - Applies to books, newspapers, and magazines, accommodation services, passenger transport, and medical products

• Reduced rate - 5% - Applies to electronic publications, agricultural products – specifically indicated, printed books, and certain magazines

• Zero rate - 0% - Applies to exports, Intra-community supply of goods 

Portugal VAT Rates

• Standard rate Mainland 23%, Azores  16%, Madeira 22% - Applies to all taxable supplies of goods and services, with some exceptions

• Intermediate rate Mainland  13%, Azores - 9%, Madeira - 12% - Applies to certain food products; catering services

• Reduced rate Mainland 6%, Azores 4%, Madeira 5% - Applies to certain food products, books, newspapers, and magazines, rental of reserved areas in camping and caravan parks, including closely linked services

VAT Rates in Other European (non-EU) Countries 

Non-EU European countries frequently align their VAT policies with the EU's VAT Directive to ensure consistency and ease trade with EU Member States. Although not legally required, these countries choose to harmonize their VAT systems with the EU's VAT system for several reasons, including fostering economic integration, simplifying tax administration, and reducing trade barriers. In addition, some countries align with EU VAT rules as part of their EU membership.

Albania VAT Rates

• Standard rate - 20 % - Applies to all taxable supplies of goods and services, with some exceptions

• Zero rate - 0% - Applies to the export of goods, the supply of services directly linked to the import or export of goods

Andorra VAT Rates

• Standard rate - 4.5% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 1% - Applies to food and drinks, and certain media like books, magazines, and newspapers

• Special rate - 2.5% - Applies to passenger transport, art, and certain cultural services, such as museums and theaters

• Increased rate - 9.5% - Applies to banking and financial services

• Zero rate - 0% -  Applies mainly to health and education products and services

Bosnia and Herzegovina VAT Rates

• Standard rate  - 17% - Applies to goods and services and import of goods to Bosnia and Herzegovina

• Zero rate - 0% - Applies to the export of goods

Iceland VAT Rates

• Standard rate - 24% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 11% - Applies to accommodation services, catering, and sale of food, sale of alcohol and alcoholic beverages, transportation of passengers, sale of newspapers, magazines, and district newspapers

• Zero rate - 0% - Applies to export of goods and services, electronically supplied services: these services are considered used where the buyer is domiciled or has a venue of operations

Liechtenstein VAT Rates

• Standard rate - 8.1% - Applies to transactions (and importation) of all other goods and on all other services subject to the tax

• Reduced rate - 2.6% - Applies to food, medicine, newspapers, magazines, books, and other printed matter of a non-advertising nature, electronic newspapers, magazines, and books without advertising character

• Special rate - 3.8% - Applies to accommodation services

North Macedonia VAT Rates

• Standard rate - 18% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 10% - Applies to other food products that are not considered essential products for human consumption

• Reduced rate - 5% - Applies to essential food products, accommodation services, or accommodation with breakfast, books as well as electronic/digital textbooks, brochures, and similar printed materials, newspapers and other periodicals, children's picture books, books as well as electronic/digital drawing and coloring textbooks for children, and cartographic products of all kinds

Moldova VAT Rates

• Standard rate - 20% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 8% - Applies to certain foods such as bread and milk products, medicine, goods imported and/or delivered on the territory of the Republic of Moldova, accommodation services, food and/or beverages, except for alcoholic production, prepared or unprepared, for human consumption

Montenegro VAT Rates

• Standard rate - 21% - Applies to the delivery of products and services performed by the taxpayer in the course of his activities for a fee and product import

• Reduced rate - 15% - Applies to books, publications, certain hospitality and accommodation services, copyrights in the field of education, literature and arts, ticketed services for cultural and sports events

• Reduced rate - 7% - Applies to essential products for human consumption, medicines, orthopedic and prosthetic devices, and public transportation services

• Zero rate - 0% - Applies to products exported from Montenegro by the seller

Norway VAT Rates

• Standard rate - 25% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 15% - Applies to the sale of food and beverages

• Reduced rate - 12% - Applies to passenger transport, accommodation, public broadcasting, and entry to cinemas, sporting events, amusement parks, and activity centers

Russia VAT Rates

• Standard rate - 22% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 10% - Applies to the sale of food products, goods for children, periodicals and book products, and medical goods

• Zero rate - 0% - Applies to the sale of goods exported under the customs export procedure, as well as goods placed under the customs procedure of a free customs zone, international transportation services, and some other operations 

Serbia VAT Rates

• Standard rate - 20% - Applies to  all taxable supplies of goods and services or import of goods

• Reduced rate - 10% - Applies to basic food, daily newspapers, medicines, publications, public transportation services, utilities

• Zero rate - 0% - Applies to the export of goods, transport, and other services directly related to exports

Switzerland VAT Rates

• Standard rate - 8.1% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 2.6% - Applies to goods for basic needs

• Special rate - 3.8% - Applies to accommodation services

Turkey VAT Rates

• Standard rate - 20% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 10% - Applies to basic foodstuffs, textiles, books, and similar publications

• Reduced rate - 1% - Applies to agricultural products such as raw cotton, dried hazelnuts, supply and leasing of goods within the scope of the Finance Leasing Law

Ukraine VAT Rates

• Standard rate - 20% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 14% - Applies to import and supply of certain agricultural products (products of plant origin, such as corn, soybeans, sunflower seeds, and certain other goods)

• Reduced rate - 7% - Applies to temporary accommodation services, supply of tickets for sports events of international and Ukrainian level, supply and import of qualifying medicines and specific medical goods, as well as medicines

• Zero rate - 0% -  Applies to the export and re-export of goods

United Kingdom VAT Rates

• Standard rate - 20% - Applies to all taxable supplies of goods and services, with some exceptions

• Reduced rate - 5% - Applies to some goods and services, e.g., children’s car seats and home energy

• Zero rate - 0% - Applies to most food and children’s clothes

Conclusion

Understanding the diverse VAT rates across Europe is vital for businesses engaged in cross-border trade and commerce. Although the EU strives towards harmonization, it allows for significant variations among Member States and exemptions within individual countries. It is crucial to remember that not all European countries are part of the EU, adding to the complexity of VAT in Europe.

By staying informed about VAT rates across Europe, businesses can ensure compliance with local VAT regulations, optimize tax planning, and avoid penalties.

Source: Taxes in Europe, 1stopVAT