Navigation path

Updated 08/2015

Updated 08/2015

VAT Basic rules


Share on 
		Share on Facebook
	
		Tweet it
	
		Share on google+
	
		Share on linkedIn
	
		
			E-mail

If you are an EU-based company, VAT is chargeable on most of your sales and purchases except exports to countries outside the EU.

VAT is paid at each stage of the production process, up to and including the sale to the final consumer.

Selling goods or services

Add the VAT to the price of the goods or services on your invoice. The customer pays you the full amount of the invoice, including the VAT.

Buying goods or services

You must pay VAT as a customer. However, you can usually deduct that VAT from the VAT you charge your own customers.

EU rules on VAT

There are standard EU rules on VAT — but the detailed application of VAT may be different in each EU country.

The basic rules of VAT, which apply throughout the EU, are contained in the VAT Directive and VAT Regulations.

Charging VAT

If you are in business — either as an individual, company, partnership or in any other legal form — and you supply goods or services in the course of that business, you must normally:

  • register with the tax authorities in the EU country where your business is established ;
  • charge your customer VAT and account for this to the tax authorities.

Supplies of goods and services on which VAT is charged are known as ‘taxed supplies'.

Although this page refers throughout to selling and sales, money does not actually have to change hands for VAT to be due — you may also have to charge VAT (usually on market value) on goods and services that:

  • you exchange for other goods or services;
  • you give away free or;
  • take for your own private consumption.

Deducting VAT

If you are in business, you can usually deduct the VAT you have paid on your own business purchases from the VAT you charge your customers. You then need to pay only the difference to the tax authorities, and report these amounts to them in your periodic VAT return.

Sometimes, the VAT your business has paid exceeds the VAT you have charged to your customers. If so, the tax authorities will reimburse or credit you with the difference.

Dig deeper, country by country:

Choose country

Choose country


* Information not yet provided by national authorities

Are all sales taxed?

No. Some goods/services are exempt from VAT.

Exemptions

Some important categories of goods/services, e.g. educational, healthcare and financial services, are mostly exempt from VAT.

If you sell any exempt goods/services, you cannot claim back any VAT you pay when buying in goods/services directly related to such sales.

Must all businesses register for VAT?

If you are making sales in the course of business, you usually need to register. There are 2 exceptions to this:

1. If the sales you make are exempt, you do not always have to register for VAT.

2. In most EU countries, there is a scheme to help small businesses, under which firms whose sales of VAT-liable goods/services fall below a certain annual limit may be exempt from VAT. These limits (‘thresholds') vary from country to country. In some countries, there is no limit and businesses must register as soon as they make any taxable sales.

Where there is a registration limit and the total value of your taxable sales in the year falls below it:

  • you may be exempt from VAT and do not charge VAT but
  • you can register voluntarily, in which case you must charge VAT

The limit applies only to businesses established in that country and not to businesses based abroad.

Invoices

When you make sales to other businesses, you must issue an invoice either in paper or electronic form.

When you register for VAT, you are given a VAT identification number, which you must show on all invoices you give to customers, as well as the VAT amount that is being charged and other standard items.

VAT rates

VAT rates by country [318 KB] (updated twice a year - January & July)

To be sure you have the correct rate, check with the local VAT office in-country.

Although VAT is charged throughout the EU, each member country is responsible for setting its own rates.

Within each country, there is a standard rate, which applies to all or most supplies and there may be one or more reduced rates — lower rates that apply to a limited variety of supplies.

Some countries are allowed a zero or super-reduced rate on some other sales.

EU legislation limits this freedom to set rates in 3 ways:

  • the standard rate may not be less than 15%, although there is no maximum limit;
  • no reduced rate may be less than 5%, with a few exceptions;

Exemption vs. zero-rating

There is an important difference between these 2 concepts:

Zero-rated sales

These are exempt, but 'with the right to deduct' — so a 0% rate is charged, but you may still deduct all the VAT you have paid on purchases directly related to this sale e.g. exports, certain financial services to customers outside the EU.

Exempt sales

These are exempt, but 'without the right to deduct' — you may not deduct the VAT you have paid on purchases related to such sales.

Local business support

Contact a local business support partner

Your enquiry will be sent to a support partner from the Enterprise Europe Network . To assist the advisor to respond in a timely and correct manner to this free service, please provide as much information as possible.

EEN-logo

Contact form

(All fields are mandatory)
Thank you, your message has been sent successfully.
Due to technical problems, your message could not been sent. Please try again later.
Please provide a valid e-mail address.

Personal details

Company details

Country

Austria

Wien

Belgium

Brussel

Bruxelles

Namur

Bulgaria

Dobrich

Plovidiv

Ruse

Sandanski

Sofia

Stara Zagora

Vratsa

Yambol

Croatia

Zagreb

Cyprus

Nicosia

Czech Republic

Brno

Brno

Liberec

Ostrava

Ostrava

Pardubice

Plzen

Praha

Usti nad Labem

Denmark

Aalborg

Copenhagen

Herning

Kolding

Næstved

Viborg

Estonia

Tallinn

Finland

Helsinki

Oulu

Tampere

Turku

Vantaa

France

Amiens

Annecy

Aulnat

Besançon

Bordeaux

Bourg en Bresse

Caen

Cayenne

Chalons-en-Champagne

Chambéry

Dijon

Fort-de-France

Grenoble

Lille

Limoges

Lyon

Marseille

Marseille

Montpellier

Montpellier

Nancy

Nantes

Orléans

Paris

Pointe-à-Pitre

Poitiers

Privas

Rennes

Rouen

Saint-Denis

Saint-Etienne

Strasbourg

Toulouse

Valence

Germany

Berlin

Bremen

Bremenhaven

Chemnitz

Dresden

Düsseldorf

Erfurt

Frankfurt/Oder

Freiburg

Hamburg

Hannover

Kaiserslautern

Kiel

Konstanz

Leipzig

Magdeburg

Mannheim

Mülheim an der Ruhr

München

Potsdam

Reutlingen

Rostock

Saabrücken

Stuttgart

Trier

Ulm

Villingen-Schwenningen

Wiesbaden

Greece

Athens

Hungary

Budapest

Debrecen

Eger

Győr

Miskolc

Nyíregyháza

Pécs

Szeged

Székesfehérvár

Zalaegerszeg

Ireland

Dublin

Italy

Firenze

Milano

Napoli

Pieta

Roma

Torino

Venezia

Latvia

Riga

Lithuania

Vilnius

Luxembourg

Luxembourg

Malta

Pieta`

Netherlands

Den Haag

Nieuwegein

Norway

Ås

Oslo

Stavanger

Tromsø

Poland

Kielce

Lublin

Warsaw

Wroclaw

Portugal

Lisboa

Romania

Arad

Bacau

Bucuresti

Cluj-Napoca

Constanta

Craiova

Galati

Iasi

Ramnicu Valcea

Timișoara

Slovakia

Bratislava

Prešov

Slovenia

Ljubljana

Spain

Barcelona

Madrid

Oviedo

Palma

Santa Cruz de Tenerife

Sevilla

Valencia

Vitoria- Gazteiz

Zaragoza

Sweden

Borlänge

Göteborg

Jönköping

Kramfors

Luleå

Malmö

Örebro

Östersund

Stockholm

Umeå

Västerås

Växjö

United Kingdom

Belfast (Northern Ireland)

Cardiff (Wales)

Edinburgh (Scotland)

London (England)

3000/3000

This information entered on this form is sent directly to a partner from the Enterprise Europe Network. Personal data entered on the form will only be used to assist the advisor to respond to your enquiry; the data will not be stored thereafter.

Help & advice