Knowledge Base: E-commerce Accounting and VAT Compliance

VAT rates in the EU in 2024: Overview and analysis

VAT rates in the EU in 2024: Overview and analysis

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Date09 Jul 2024
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Value added tax (VAT) is one of the main sources of budget revenues in European Union (EU) countries. As an indirect tax, VAT is included in the price of goods and services, ultimately paid by the consumer. Although the European Union sets minimum VAT requirements, individual Member States have considerable freedom to adapt their tax systems. Let’s take a closer look at the VAT rates across the EU in 2024 and how they vary between countries.


VAT rates in European countries for 2024

Below is a detailed table that outlines the standard and reduced VAT rates in Europe for 2024:

Country Standard VAT rate Reduced VAT rate
Austria VAT 20% 10%, 13%
Belgium VAT 21% 6%, 12%
Bulgaria VAT 20% 9%
Croatia VAT 25% 5%, 13%
Cyprus VAT 19% 5%, 9%
Czech Republic VAT 21% 12% (consolidated from 10% and 15%)
Denmark VAT 25%
Estonia VAT 22% (20% im 2023) 5%, 9%
Finland VAT 24% 10%, 14%
France VAT 20% 2.1%, 5.5%, 10%
Greece VAT 24% 6%, 13%
Spain VAT 21% 4%, 10%
Netherlands VAT 21% 9%
Ireland VAT 23% 4.8%, 9%, 13.5%
Luxembourg VAT 17% 3%, 8%, 14%
Lithuania VAT 21% 5%, 9%
Latvia VAT 21% 5%, 12%
Malta VAT 18% 5%, 7%
Germany VAT 19% 7%
Poland VAT 23% 5%, 8%
Portugal VAT 23% (22% Madeira, 16% Azores) 6% (5% Madeira, 4% Azores), 13% (12% Madeira; 9% Azores)
Romania VAT 19% 5%, 9%
Slovakia VAT 20% 10%
Slovenia VAT 22% 5%, 9.5%
Switzerland VAT 8.1% (7.7% in 2023) 2.6% (2.5% in 2023), 3.8% (3.7% in 2023)
Sweden VAT 25% 6%, 12%
Hungary VAT 27% 5%, 18%
United Kingdom VAT 20% 5%
Italy VAT 22% 4%, 5%, 10%

Standard VAT rates

The standard VAT rate is the general rate applied to most goods and services. It serves as the base rate from which countries determine their other, reduced rates. In 2024, Luxembourg has the lowest basic VAT rate in Europe, at 17%. This is particularly noteworthy because Luxembourg, one of the wealthiest EU countries, opts for a more competitive VAT rate, potentially attracting investors and consumers.

On the opposite end, Hungary has the highest standard VAT rate at 27%. Such a high rate significantly impacts the final prices of goods and services, influencing consumption and purchasing decisions. The difference in VAT rates between Luxembourg and Hungary perfectly illustrates how different approaches to tax policy can be in the EU.


Reduced VAT rates

Reduced VAT rates are applied to lower the cost of essential goods and services, often of significant social importance. In 2024, many EU countries are introducing various reduced rates to support specific sectors or societal groups. For example:

  • France: Offers reduced rates of 10%, 5.5%, and a super-reduced rate of 2.1%, covering items like food, books, and passenger transport.
  • Spain: Provides 10% and a super-reduced 4% rate for items such as certain food products, newspapers, and hospitality services.
  • Germany: Applies a single reduced rate of 7% for goods like food, medical services, and cultural events.

Denmark stands out as the only EU country without any reduced VAT rates. All goods and services there are taxed at the standard VAT rate of 25%.


Super-reduced VAT rates

Super-reduced VAT rates, under 5%, are applied by several European countries to items deemed crucial for society. In 2024, these rates are seen in countries like:

  • Spain: 4% for pharmaceuticals, social services, newspapers and more.
  • Luxembourg: 3% for food products, children’s items, books and more.
  • Italy: 4% for medical devices for disabled persons, TV licenses, social housing and more.

These rates are often used to facilitate access to essential goods and services, which helps alleviate the economic impact on consumers, especially those with lower incomes.


VAT calculation principles

VAT is charged at the last stage of sale, i.e. when the goods or services reach the final consumer. This means consumers pay VAT when purchasing goods and services they ultimately acquire. In EU countries, VAT is applied according to the rates in the country of purchase.

For businesses operating across multiple EU countries, understanding the €10,000 sales threshold is crucial. Once a business exceeds this sales amount in a country, it must register for VAT there and account for VAT in that country or use the VAT OSS (One Stop Shop) procedure. The VAT OSS allows businesses to consolidate VAT reporting for sales across different EU countries into a single return.


Summary

The VAT rates in EU countries for 2024 reveal a wide range of approaches to managing this tax. Each country has its unique factors influencing the setting of standard, reduced, and super-reduced rates. For businesses operating internationally, understanding these differences and their implications is essential.

Given the diverse VAT rates, companies and consumers need to be aware of how tax regulations affect the prices of goods and services they buy or sell. By understanding these differences, you can better plan and manage costs and effectively use the opportunities offered by the EU single market

For expert guidance to avoid misunderstandings and ensure compliance with current regulations, please contact us – amavat®.

Iga Turniak

Junior Process Management & QM Specialist at getsix®, Marketing Assistant at getsix® and amavat®. With the company since March 2022. Interested in SEO, content marketing, and the e-commerce industry.

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