2026 VAT Rates in Europe

The EU nations with the best customary VAT charges are Hungary (27 p.c), Finland (25.5 p.c), and Croatia, Denmark, and Sweden (all at 25 p.c). Luxembourg levies the bottom customary VAT price at 17 p.c, adopted by Malta (18 p.c), Cyprus, and Germany (each 19 p.c). The EU’s common customary VAT price is 21.9 p.c, almost seven proportion factors increased than the minimal customary VAT price required by EU regulation.

Among the many eight main European nations that aren’t a part of the European Union—Georgia, Iceland, Moldova, Norway, Switzerland, Turkey, Ukraine, and the UK—solely Switzerland levies a typical VAT price beneath the EU minimal at a price of 8.1 p.c. Compared, the United States’ mixed state and native gross sales taxA gross sales tax is levied on retail gross sales of products and providers and, ideally, ought to apply to all ultimate consumption with few exemptions. Many governments exempt items like groceries; base broadening, akin to together with groceries, may maintain charges decrease. A gross sales tax ought to exempt business-to-business transactions which, when taxed, trigger tax pyramiding.  charges averaged solely 7.5 p.c in 2025.

Usually, consumption taxes are an economically environment friendly means of elevating tax income. Ideally, to attenuate financial distortions, there ought to be just one customary price that’s levied on all ultimate consumption, with as few exemptions as doable. Nevertheless, EU nations levy lowered charges and exempt sure items and providers from VAT.

One of many important reasons for lowered VAT charges and VAT-exempted items/providers is the promotion of fairness, as lower-income households are likely to spend a bigger share of their incomes on items and providers, akin to meals and public transportation. Different causes embrace encouraging the consumption of “advantage items” (e.g., books), selling native providers (e.g., tourism), and correcting externalities (e.g., clear energy).

Nevertheless, evidence exhibits that lowered VAT charges and VAT exemptions usually are not essentially efficient at attaining these coverage targets and might even be regressive in some situations. Decreased charges and exemptions can result in increased administrative and compliance prices and might create financial distortions. A latest examine exhibits that scrapping VAT lowered charges in EU nations will enable customary charges to drop underneath 15 p.c. To deal with fairness issues, the Organisation for Financial Co-operation and Growth as a substitute recommends measures that instantly improve poorer households’ actual incomes.

Many European nations have made adjustments to their VAT charges since final yr. Austria zero-rated some hygiene merchandise from 2026. Estonia has elevated its customary price from 22 to 24 p.c in July 2025. Germany is eroding its VAT base by transferring meals in eating places from the 19 p.c customary price to the 7 p.c lowered price from 2026. Greece prolonged the 30 p.c discount in all VAT charges to extra islands. Lithuania broadened its VAT base by transferring some reduced-rate gadgets from the 9 to the 12 p.c bracket, a reversal of earlier coverage adjustments in 2023. The Netherlands moved lodging providers from the 9 p.c lowered price to the 21 p.c customary price. Finland has additional lowered its lowered price from 14 to 13.5 p.c, widening the hole to its 25.5 p.c customary price. Romania has elevated its customary price from 19 to 21 p.c in August 2025 and consolidated its 5 and 9 p.c brackets right into a single 11 p.c lowered price.