If you are a business operating in or selling into the EU, this page is likely to be relevant to you.
The Value Added Tax (VAT) is a consumption tax assessed on the value added to nearly all goods and services bought and sold in and into the European Union. It is chargeable on most goods and services supplied within and into the EU, but not on exports to countries outside the EU.
VAT is collected at each stage along the supply chain. It is charged on the value added to goods and services at each stage of production and distribution.
In general, VAT-registered businesses can deduct the VAT they have paid to other businesses from the VAT they have collected. This ensures that the tax is neutral for businesses that make onward taxable supplies, regardless of how many transactions are involved.
As such, VAT is a tax on consumption that is ultimately borne by the final consumer and is charged, at the appropriate rate, on the sales price of the goods or services.
Learn more about how VAT works
VAT invoicing
Businesses operating in the EU are subject to a single set of basic EU-wide invoicing rules and, in certain areas, national rules set by the individual EU Member State. A VAT invoice contains the details of a taxable supply and all related information as set out by VAT law.
Invoicing is compulsory for most business-to-business (B2B) transactions since a VAT invoice is the basis for establishing a business’ VAT liability. It also enables businesses that make onward taxable supplies to reclaim the VAT charged to them.
For business-to-consumer (B2C) transactions, a VAT invoice is required only for certain transactions.
More about EU rules on VAT invoicing
More about national rules on VAT invoicing
VAT refunds for businesses
The EU maintains rules on VAT refunds in three scenarios:
- Cross-border refunds for EU businesses
- Refunds for non-EU businesses
- Refunds for non-EU tourists
More about VAT refunds in the EU
For VAT refunds in which both vendor and customer are based in the same EU Member State, visit the website of that Member State’s national tax authority.
VAT scheme for small businesses and VAT exemptions
Supplies by established small businesses may be exempt from VAT by individual Member States if the annual turnover of the business does not exceed a given threshold.
As of 1 January 2025, a new VAT scheme for small businesses will open the VAT exemption to eligible small businesses established in other Member States. This will help reduce VAT compliance costs.
On 18 February 2020, the EU agreed to simplification rules to help reduce VAT compliance costs for small businesses. The new VAT scheme for SMEs will apply as of 1 January 2025.
More about the EU VAT scheme for small businesses
In addition, a VAT exemption may apply to some goods and services such as education, healthcare and financial services.
More information on the websites of national tax authorities
VAT for e-commerce - One Stop Shop
The VAT One Stop Shop is aimed at businesses engaged in cross-border business-to-consumer (B2C) e-commerce activities.
Online businesses, including both online sellers and online marketplaces or platforms, can benefit from a significant reduction in red tape. These businesses are required to register in only one Member State for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU.
VAT rates
VAT rates vary among EU Member States. The standard VAT rate in the EU is at least 15%. In addition, each Member State may apply up to two reduced rates of at least 5%, one super-reduced rate lower than 5% and one zero rate for a limited set of goods and services taken from an agreed list.
The most reliable source of information on current VAT rates for a specified product in a particular EU Member State can be found on national tax authorities' websites. An overview of the different rates applied in each EU Member State can be found in the Taxes in Europe Database (TEDB).
Related links
- Check VAT numbers with the VAT Information Exchange System (VIES)