In the EU, the VAT Directive sets the general framework for VAT rates. Within this framework, it is up to each Member State to set the number and level of its VAT rates and the categories of supplies to which each rate applies.
Standard rate
This is the rate EU countries must apply when supplying most goods and services. It must be no less than 15%, but there is no maximum (Art.97 VAT Directive).
Reduced rates
Following the reform of the EU system of VAT rates in force since April 2022 (Council Directive (EU) 2022/542), EU countries may apply:
- up to two reduced rates as low as 5% to the supply of goods and services in up to 24 categories included in Annex III of the VAT Directive (Art.98(1) VAT Directive)
- one super-reduced rate lower than 5% and one exemption with right of deduction (‘zero rate') to a maximum of seven categories of supplies of goods and services considered to cover basic needs (e.g. foodstuffs, medicines, pharmaceutical products) (Art.98(2) VAT Directive)
The VAT Directive also provides for transitional periods for the phasing out of existing preferential treatment of environmentally harmful supplies such as fossil fuels and chemical pesticides.
The VAT rates applied in each Member State can be consulted in the Taxes in Europe Database (TEDB). Note that the information contained in TEDB is provided by EU Member States themselves.
Derogations
There are several existing derogations that allow certain Member States to apply lower rates.
Following the reform of the EU system of VAT rates, all Member States have had the option to introduce, by a set date, the same type of rates to the same goods and services under the same conditions, while respecting the VAT rate framework set by the VAT Directive.
In addition, some derogations currently allow certain Member States to apply reduced rates not lower than 12% (parking rate) to certain goods and services not listed in Annex III of the VAT Directive. In line with the principle of equal treatment, all Member States have had the option to introduce, by a set date, a parking rate to those same goods and services under the same conditions.
Legal texts
- Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax
- Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value added tax
