VAT in Europe: Country Rate Comparison
VAT in Europe: Country Rate Comparison
VAT (Value Added Tax) is harmonised at European level, but each member country of the European Union retains some flexibility in setting its rates. This diversity can create challenges for businesses operating in multiple European countries and influences cross-border commercial strategies.
Overview of European VAT
Since 1993, the European Union has established a harmonised VAT system based on the VAT Directive 2006/112/EC. This directive establishes common rules while allowing Member States to adapt certain aspects to their national specificities.
Fundamental principles
The European VAT system is based on several key principles:
- Mandatory minimum rate: 15% for the standard rate
- Authorised reduced rates: Minimum of 5% on certain goods and services
- Destination principle: VAT is due in the country of consumption
- Input VAT deduction: Businesses can deduct VAT paid on their purchases
Comparative table of VAT rates by country
Standard VAT rates in Europe (2025)
| Country | Standard Rate | Main Reduced Rate | Super-Reduced Rate |
|---|---|---|---|
| Germany | 19% | 7% | - |
| Austria | 20% | 10% / 13% | - |
| Belgium | 21% | 6% / 12% | - |
| Bulgaria | 20% | 9% | - |
| Cyprus | 19% | 5% / 9% | - |
| Croatia | 25% | 5% / 13% | - |
| Denmark | 25% | - | - |
| Spain | 21% | 10% | 4% |
| Estonia | 20% | 9% | - |
| Finland | 24% | 10% / 14% | - |
| France | 20% | 5.5% / 10% | 2.1% |
| Greece | 24% | 6% / 13% | - |
| Hungary | 27% | 5% / 18% | - |
| Ireland | 23% | 9% / 13.5% | 4.8% |
| Italy | 22% | 5% / 10% | 4% |
| Latvia | 21% | 5% / 12% | - |
| Lithuania | 21% | 5% / 9% | - |
| Luxembourg | 17% | 8% / 14% | 3% |
| Malta | 18% | 5% / 7% | - |
| Netherlands | 21% | 9% | - |
| Poland | 23% | 5% / 8% | - |
| Portugal | 23% | 6% / 13% | - |
| Czech Republic | 21% | 10% / 15% | - |
| Romania | 19% | 5% / 9% | - |
| Slovakia | 20% | 10% | - |
| Slovenia | 22% | 5% / 9.5% | - |
| Sweden | 25% | 6% / 12% | - |
Analysis of European disparities
Highest rates
Hungary holds the record with 27% standard VAT, followed by Croatia, Denmark and Sweden at 25%. These high rates are often explained by:
- Developed social protection systems
- Lower direct taxation
- Specific budgetary policies
Most advantageous rates
Luxembourg offers the lowest standard rate at 17%, followed by Malta (18%) and Germany (19%). These countries often attract businesses thanks to:
- Competitive overall taxation
- Favourable business environments
- Economic attractiveness strategies
Notable country specificities
France: A four-rate system
- Standard rate: 20%
- Intermediate rate: 10% (restaurants, transport)
- Reduced rate: 5.5% (food, books)
- Super-reduced rate: 2.1% (medicines, press)
Denmark: Simplicity with a single rate
Denmark applies a single rate of 25% on all goods and services, considerably simplifying administrative management.
Germany: The reference model
With its 19% standard rate and 7% reduced rate, Germany often influences European decisions on VAT matters.
Spain: Regional specificities
- Peninsula: 21% / 10% / 4%
- Canary Islands: IGIC (Impuesto General Indirecto Canario) at 7%
- Ceuta and Melilla: IPSI at 10%
Impact on European businesses
Cross-border trade
VAT rate differences create several challenges:
- Administrative complexity: Managing multiple rates according to destination countries
- Tax optimisation: Location strategies influenced by VAT
- Regulatory compliance: Respecting obligations in each Member State
E-commerce and VAT
Since July 2021, new European rules for e-commerce impose:
- Single threshold of €10,000 for distance sales
- One Stop Shop (OSS) to simplify declarations
- VAT at destination country rate for the consumer
Recent developments and trends
Progressive harmonisation
The European Union is working on several harmonisation projects:
- Definitive VAT: Abolition of the current transitional regime
- Raised minimum rates: Discussions on increasing the 15% threshold
- Digitalisation: Real-time declarations (following the Spanish SII model)
Post-Brexit challenges
The UK's withdrawal has created new challenges:
- New customs formalities between the EU and UK
- Import VAT for UK-EU exchanges
- Northern Ireland protocol maintaining specific EU rules
Practical cases and examples
Example 1: Sale of a product at £100 ex-VAT
| Destination country | VAT Rate | Price inc. VAT |
|---|---|---|
| Luxembourg | 17% | £117 |
| Germany | 19% | £119 |
| France | 20% | £120 |
| Hungary | 27% | £127 |
Maximum difference: £10 between Luxembourg and Hungary
Example 2: European restaurant
For a meal at £50 ex-VAT:
| Country | Applicable rate | Final price |
|---|---|---|
| France | 10% | £55 |
| Germany | 7% | £53.50 |
| Denmark | 25% | £62.50 |
Tools for calculating European VAT
To facilitate your VAT calculations across different European countries, use our universal VAT calculator which automatically integrates rates from all member countries.
Our calculator features:
- Automatic updates of European rates
- Multi-currency conversion
- Ex-VAT to inc-VAT calculation and vice versa
- Rate history for your declarations
Conclusion
VAT disparities in Europe reflect national fiscal sovereignties while fitting into a harmonised framework. For businesses, understanding these differences is crucial to:
- Optimise their pricing according to markets
- Comply with their obligations in each country
- Anticipate regulatory developments in Europe
The future tends towards enhanced harmonisation, but national specificities will persist. Businesses must therefore equip themselves with appropriate tools and specialist advice to navigate effectively in this complex European fiscal landscape.
Use our universal VAT calculator for all your European calculations and stay informed of the latest tax developments by subscribing to our newsletter.