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European VAT. What are the VAT rates in the European Union for 2023?
- Last update: 21.08.2023
- Published: 27.03.2023
- Read in: 5 min
VAT, which stands for Value Added Tax, falls under the category of indirect taxes and is incorporated into the price of goods and services, with the final consumer bearing the responsibility for its payment.
Within Europe, the European Union has set a minimum VAT rate of 15%, along with rules governing the collection, tax exemptions, and obligations for businesses, among other aspects.
However, individual EU member states have a certain degree of freedom to adapt these rules according to their needs, leading to varying VAT rates across most countries. Let’s explore the specifics!
The European Union VAT rates for 2023
|UE Country||Standard VAT rate||1. Reduced VAT rate||2. Reduced VAT rate||Super reduced VAT rate|
At this point, it is worth mentioning that in 2023, the applicable VAT rates in Luxembourg, including the 17%, 14%, 8%, and super reduced rate of 4%, have all been decreased by 1 percentage point.
Standard VAT rate
The standard VAT rate serves as the benchmark for reduced VAT rates.
Luxembourg has the lowest standard VAT rate in Europe, standing at 17%. On the other hand, three countries, namely Cyprus, Germany, and Romania, have a standard VAT rate of 19%.
In contrast, Hungary has the highest standard VAT rate in Europe, reaching 27%.
Reduced VAT rates
By default, the standard VAT rate encompasses all goods and services, except those eligible for reduced rates, which are usually specified in domestic value-added tax regulations.
As indicated in the table provided, certain countries like France, Ireland, Luxembourg, and Italy have up to three reduced VAT rates, each applicable to specific groups of products and services.
In contrast, countries such as Bulgaria, Estonia, Spain, the Netherlands, Germany, and Slovakia have only one reduced VAT rate.
Denmark, being the sole European Union Member State, does not have any reduced VAT rates.
Super reduced VAT rate
Super reduced VAT rates are those below 5%, and they are applicable in France, Spain, Ireland, Luxembourg, and Italy.
Various groups of products fall under the super reduced VAT rate depending on the country, and frequently, a specific category applies to multiple countries, e.g:
- books, newspapers, publishing products
- medicines, pharmaceuticals, medical equipment, hygiene products, TV licences
The lowest VAT rate, known as the zero rate, is applied to certain goods and services. Within the European Union, the following fall under the 0% VAT rate:
- Export of goods to destinations outside the EU.
- Intra-community supply of goods within the EU.
- Services rendered to businesses located outside the EU.
Where and when is VAT charged?
VAT is imposed at the last stage of the sales process, targeting the final consumer, in the country where the goods and services are purchased, in accordance with the VAT rates set by the authorities of that country.
Additionally, once the total sales in EU countries exceed €10,000, the seller must register for VAT in the specific country where the threshold has been exceeded and settle any VAT obligations there. Alternatively, they can opt for VAT OSS, settling all cross-border sales to EU countries at a single tax office. Nevertheless, it’s important to note that in such cases, amounts exceeding the limit in a particular country should be settled at the VAT rate applicable in that particular country.
VAT rates in Europe - summary
The VAT rates displayed in the chart above demonstrate the variations across different EU countries. Additionally, specific rules regarding reduced rates can differ from one country to another. If you require any assistance related to VAT, such as registration, settlement, filing VAT returns, or navigating the VAT OSS procedure, please don’t hesitate to book a free consultation with our team.