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Taxation and Customs Union

Value Added Tax (VAT)

A consumption tax on goods and services bought and sold within and into the EU

Value Added Tax (VAT)

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Value Added Tax (VAT) is a consumption tax on the value added to nearly all goods and services bought and sold in and into the European Union. VAT is an important own resource for the EU budget. 

VAT is...

  • an indirect tax on the vast majority of goods and services 

  • borne by the final consumer, not by businesses

  • charged as a percentage of the sales price and collected fractionally at every stage of production and distribution

  • neutral, as the tax borne by the final consumer is the same regardless of the length of the supply chain

Goods sold for export or services sold to customers outside the EU are normally not subject to VAT. However, VAT is charged on most imports into the EU. 

Learn more about how VAT works.


Implementation of VAT

The main piece of legislation on Value Added Tax (VAT) is the EU VAT Directive. Each Member State is responsible for transposing the Directive into national legislation and correctly applying it within its territory. Visit our page on country-specific information on VAT to learn more. 

VAT rates

EU law requires a standard VAT rate of at least 15% to apply to most goods and services. Member States may also apply up to two reduced rates as low as 5%, one super-reduced rate lower than 5% and one zero rate to a limited set of goods and services taken from an agreed list. 

The most reliable information on current VAT rates for a specified product in a particular Member State is the website of the national tax authority. An overview of the different rates applied in each EU country can be found in the Taxes in Europe Database (TEDB). 

More about VAT rates 

VAT Special Schemes

In certain circumstances, special schemes are in place to simplify VAT implementation, reduce administrative burden or reduce VAT compliance costs. These schemes target, among others, specific transactions (One Stop Shop), small businesses, farmers and travel agents. 

More about VAT Special Schemes 

VAT in the Digital Age

On 8 December 2022, the European Commission proposed a series of measures to modernise, simplify and strengthen the VAT system through digitalisation, while fighting VAT fraud. The proposal put forward a vision for an updated VAT system based on: 

  • cross-border business-to-business e-invoicing 

  • real-time digital reporting 

  • updated rules for platform economy operators in certain sectors 

  • a single VAT registration in the EU 

More about VAT in the Digital Age 

Fight against VAT fraud

VAT is an important own resource for both EU and national budgets. According to the 2023 VAT Gap report, Member States lost around €61 billion in VAT in 2021 with VAT fraud accounting for a large portion.

The EU is thus actively tackling VAT fraud through a range of initiatives, such as improved administrative cooperation , the VAT in the Digital Age proposal and the centralisation of payment information on online sales. 

More about the fight against VAT fraud

Legal texts


Frequently asked questions about VAT

Information about the application of VAT rates in the EU.

How to get a VAT refund for cross-border transactions

A supply of goods or services is an exempt supply if no VAT is applied to it, whether at the final stage of sale to the consumer or at some intermediate business-to-business stage.

The various groups advising and supporting the EU on VAT matters.

How tax authorities can use technology to fight tax fraud and benefit businesses, and on whether the current VAT rules are adapted to doing business in the digital age.

Businesses in and outside of the EU that engage in cross-border business-to-consumer e-commerce may opt to use one of three special schemes under the One Stop Shop.