VAT – Value Added Tax
Pay VAT in the country where you shop
As a private individual shopping in the EU, you should only pay VAT once, in the country where you make your purchase.
You can bring home anything you buy in another EU country, without stopping at the border or making a customs declaration. The only condition is that your purchases must be for your own or your family's personal use, and not intended for resale.
If you are visiting from outside the EU you are entitled to a VAT refund on goods you have bought during your stay in the EU if the goods are shown to customs on departure within 3 months of their purchase together with the VAT refund documents. These are normally prepared by the seller although, as the scheme is voluntary, not all merchants participate. Some countries set a minimum value of purchases to qualify for a refund.
Buying online from another EU country
Special rules may apply when you buy goods from another EU country for delivery to your country of residence. If the company you buy from sells goods over a certain value to your country, where the goods are delivered, they cannot charge VAT in the country where you make your purchase.
Instead, they have to apply VAT in the country where the goods are delivered – VAT of destination. The maximum amount for these cross-border sales is set by each EU country at either EUR 35 000 or EUR 100 000. This means that most major online retailers delivering within the EU will have to apply the VAT of destination rule.
Sometimes you may pay a higher VAT rate
Katrin, from the Netherlands, ordered a book from a large online retailer in Ireland. When she paid for the order and entered her address, she noticed that the price had suddenly gone up. She checked the reason and discovered that the company had charged her Dutch VAT at 9% instead of Irish VAT at 0%.
In the Netherlands, the maximum limit to be able to deliver goods without paying Dutch VAT is EUR 100 000. This means that a company which sold more than EUR 100 000 in goods to the Netherlands during the previous financial year must apply the VAT rate of the country of destination. The company Katrin has ordered from delivers frequently to the Netherlands and therefore has to charge her Dutch VAT, even though her order is being shipped from Ireland.
This rule does not apply to second-hand goods, works of art, collectors' items or antiques.
If you buy tobacco products or alcoholic drinks online from another EU country, the price will include excise duties, regardless of the quantity and even if the goods are a gift.
The trader is responsible for paying the excise duty due in the EU country of destination.
You should therefore expect the price for these types of goods to reflect the cost of excise duty. If the price is very low, make sure you check with the seller if the duty has been paid before you make your purchase. If the seller hasn't paid the excise duty, your goods can be seized by customs on arrival or you may be required to pay the excise duty yourself. You should always make sure that the seller will pay the necessary excise duty in the EU country of destination.
If you buy goods online from outside the EU, VAT, customs and excise duty is always due.
Exception for telecommunications, broadcasting and electronic services
VAT on telecommunications, broadcasting and electronic services is charged in the country where you live (the country where you are established, have your permanent address or usually live), and not in the country from where you purchase the service. These rules apply to services puchased both within and from outside the EU.
VAT on digital content is from the country of residence
Senta, lives in Sweden and often purchases eBooks from a Finnish online book seller. The Finnish supplier must charge her Swedish and not Finnish VAT.
Exceptions for other services bought online
When you buy services online from a trader established in the EU, you pay the VAT rate of the country where the trader is established. This rule also applies if you live in a different EU country from the trader.
Paying VAT in the country where the trader is established
Joao runs a consultancy company which is based in Lisbon. He provides consulting services to a private individual living in Copenhagen. As Joao's company is registered in Portugal, he has to charge his Danish customer Portuguese VAT.
However, there are many exceptions to this rule. Some of the most common exceptions are:
- Services provided by an intermediary: VAT is charged in the country where the main transaction with the intermediary takes place. For example,if the owner of a summer cottage in France wants to move some furniture to her home in Sweden and asks an intermediary to find a company that will take care of the removal. French VAT will be due on the intermediary's commission fee because the main supply (i.e. the transportation of goods between 2 EU countries) takes place at the point of departure.
- Services linked to immovable property are taxed where the property is located. For example, if an architect based in France is hired to design a house in Spain. The architect's fee will be subject to Spanish VAT.
- Passenger transport is taxed according to the distance covered. For example,if the price of a bus ticket for a journey from Poland to France via Germany will include Polish, German and French VAT, in proportion to the distance covered in each country. If the bus also travels via Switzerland, there will be no EU VAT on that part of the journey, as Switzerland is not an EU country.
- Restaurant and catering services (other than those on board ships, aircraft or trains) are taxed at the place where the services are physically carried out. For example, if a company based in Luxembourg supplies the food and drinks for an event in Florence. The company must charge Italian VAT.
Please note that this list is not exhaustive.
Exception for cars
For new cars bought in another EU country, VAT is paid in the country where you import and register your car (your country of residence). This VAT scheme also applies to other new means of transport, such as large motorbikes, boats and aircraft.
Find out more about paying VAT when you buy a vehicle in another EU country.