EU VAT Rates

January 18, 2021

Value-added tax, or VAT is a type of indirect tax levied on the price of goods or services at each stage of production, distribution, or sale to the end customer. The key for the calculation of value-added tax is a VAT rate. VAT rates apply to certain goods and services depending on the VAT legislation of each Member State.

In practice, besides the standard VAT rate, almost all EU Member States have reduced VAT rates. The exception is Denmark, in which a standard VAT rate is being applied to all goods and services.

Reduced tax rates apply to certain goods and services, in practice, mostly to existential goods or some social services. There are also some services that are zero-rated or exempt from the VAT.

A full list of the Member States and the VAT rates applicable can be found below:

EU VAT Rates by EU Member State

Here is a list of products and services with corresponding VAT rates applied in the Member States of the European Union.

Which Tax Rate To Apply To A Certain Transaction?

As buyers and sellers are often located in different regions or countries, sales transactions can be subject to different laws and tax rules, which makes it difficult to determine what indirect taxes and rates you should apply to transactions.

Determining the correct tax rate depends on certain variables:

  • The subject of the transaction—services or physical goods.
  • The parties ’taxable status’ —business-to-business (B2B) or business-to-customer (B2C).
  • The location of the supplier and the customer.
  • Tax regulations in the supplier’s and customer’s countries.

To facilitate the efforts needed to determine the right tax rate that should be applied, Fonoa developed Fonoa Tax. The Fonoa Tax engine automatically determines the correct tax treatment for sales transactions anywhere in the world. After you provide minimal transaction data input, the tax engine will determine if the transaction is taxable, what tax rate applies, and the amount of tax that you need to charge for that transaction.

[Date Updated: 18/01/2021]