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It applies to almost all goods and services for use or consumption. More than 160 countries around the world use value-added taxation. Supplier assess and collect at each stage of the supply chain, in contrast to sales tax. It applies to both services and goods.

VAT stands for Value added tax. It is harmonised by specific directives and regulations within European Union. 

Definition of Value Added Tax

  • first, VAT applies to all commercial activities involving the production and distribution of goods and the provision of services.
  • second, focused on consumption borne by the final consumer.
  • third, collected neutrally, taxable persons (i.e., VAT-registered businesses) deduct from collected amount, the amount  paid.
  • fourth, indirect : paid to the revenue authorities by the seller of the goods (taxable person).

Example : 

  • customer pays VAT on the goods or services bought by supplier
  • Customer is either a business or a private individual.
  • Periodically, businesses with right to deduct ,calculate the balance and submit a return to local revenue Administration :
    • return results in a payment when collected VAT is higher than paid one.
    • return results in a credit when paid VA is higher than collected one.

Rates in force

First of all, EU law only requires that the standard VAT rate must be at least 15% and the reduced rate at least 5%.

Also, the most reliable source of information on current VAT rates for a specified product in a particular EU country is that country’s Revenues authority

As a result, the rates applied in all EU countries are available in the EU information document

Check the rates in force

Finally, V.A.T. Directive set VAT rules, which member states implement in their national legislation. The practical application and the administrative practices of each EU country therefore varies.

More about national V.A.T. rules

You could also find more information about related topics :
Excice duties compliance