VAT rules and rates

Value Added Tax (VAT) is a consumption tax that is applied to nearly all goods and services that are bought and sold for use or consumption in the EU.

The EU has standard rules on VAT, but these rules may be applied differently in each EU country. In most cases, you have to pay VAT on all goods and services at all stages of the supply chain including the sale to the final consumer. This includes from the beginning to the end of a production process, e.g. buying components, transport, assembly, provisions, packaging, insurance and shipping to the final consumer.

When is VAT charged?

For EU-based companies, VAT is chargeable on most sales and purchases of goods within the EU. In such cases, VAT is charged and due in the EU country where the goods are consumed by the final consumer. Likewise, VAT is charged on services at the time they are carried out in each EU country.

VAT isn't charged on exports of goods to countries outside the EU. In these cases, VAT is charged and due in the country of import and you don't need to declare any VAT as an exporter. However, when exporting goods you will need to provide documentation as proof that the goods were transported outside the EU. Such proof could be provided by presenting a copy of an invoice, a transportation document or an import customs record to your tax authorities.

You will need to provide this proof to be able to fully deduct any receivable VAT that you have paid in a previous related transaction leading up to the export. Insufficient documentation may mean you won't have the right to a VAT reimbursement when exporting goods.

VAT rules at national level

VAT rules can be applied differently in each EU country. Read more about the rules in the country where your company operates.

File a VAT return online

If your business is registered in the EU, you can file a VAT return online (in most regions) in the following EU countries:

Although VAT is charged throughout the EU, each member country is responsible for setting its own rates. You can consult the rates in the table below but to be sure you have the correct rate, it is recommended that you check the latest rates with your local VAT office.

VAT rates

There are various types of VAT rates that are applied in EU countries. The rate depends on the product or service involved in the transaction. There are also special rates which were set according to VAT rates implemented in EU countries before they joined the EU.

VAT rates applied in EU countries

Although VAT is charged throughout the EU, each EU country is responsible for setting its own rates. You can consult the rates that currently apply in the table below. You should check the latest rates with the VAT authority of your country.

Standard rate

Each EU country has a standard rate which applies to the supply of most goods and services. This cannot be less than 15%.

Reduced rate

One or two reduced rates may be applied to supply of specific goods and services (based on the list in Annex III of the VAT Directive), but - in most cases - not to electronically supplied services. The reduced rates mentioned here cannot be less than 5%.

Special rates

Some EU countries are allowed to apply special VAT rates on certain supplies. These special rates apply to EU countries that were applying them on 1 January 1991.

They were originally meant to be transitional arrangements for a smoother shift to the EU VAT rules when the Single Market came into force on 1 January 1993, and were intended to be gradually phased out.

There are 3 types of special rates:

• Super-reduced rates
• Zero rates
• Parking rates

Super-reduced rates

Super-reduced rates of less than 5% are applied to the sales of a limited list of goods and services in certain EU countries.

Zero rates

Zero rates are applied to certain sales by some EU countries. When a zero rate is applied the consumer doesn't have to pay any VAT, but you still have the right to deduct the VAT you paid on purchases directly related to the sale.

Parking rates (or intermediary rates)

Parking rates are applied by some EU countries to certain supplies of goods and services that aren't included in Annex III of the VAT Directive. Those countries have been allowed to continue applying reduced VAT rates on these supplies, instead of the standard rate, provided that those reduced rates are no lower than 12%.

Taxes in Europe database

For a full overview of the categories related to each VAT rate mentioned above, you can refer to the Taxes in Europe database.