VAT in Europe

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Nobody gets rid of taxes… well, nobody should. They are a part of each and every one of our lives, and we pay taxes even when we are not even aware of doing so. This is the case with VAT.

VAT in Europe We all pay for it, even though only the percentages change and the way each country in the European Union obtains it.

Why is VAT so important in Europe? Not only in Europe, in most countries of the world, VAT is a key part of the financing of countries, since, as we will see later, it serves to tax the delivery of goods and services and represents practically the most important . income in the form of taxes.

Yes, that is why when there is a crisis and the government requires revenue, the first tax that they think to touch, or the one that the opposition protects the most, is always VAT, since it is the one that affects the majority of the population, and because any increase, even of one percentage point, entails an entry . of money to the coffers of the state quite important.

Como ves, en este post te enseñamos todo sobre el IVA en Europa: importes por país, cómo se obtiene, a qué afecta … pero, ante todo, hay que explicar qué es el IVA.

What is VAT

It is paradoxical that we all complain, at times, about how much we pay for VAT in Europe, and if you ask us, perhaps there are few who can establish or clarify what VAT is that leaves us so angry.

VAT, before you do a little digging, it is an indirect taxDicho de otra forma, cuando pagas, a modo de ejemplo, un televisor, estás pagando el impuesto al Estado, aún cuando be el empresario quien rellene el formulario de pago a la Agencia Tributaria, no tú de forma directa.

The name VAT means "Value Added or Added Tax" ... but what is added value or added value? It is the value added to the products and services that originate in the country.

Value added is the value that is added to something. As an example, imagine that you have a business that sells household appliances, and you buy a Samsung SmartTV, at € 450, but you put a sale price of € 700, and you sell it. You have added a value to the TV of € 250.

Lo mismo ocurre si eres una persona que hace cosas u ofrece servicios. Todas las persons y compañías que agregan valor a un bien o servicio están sujetas al impuesto al valor agregado.

Later, VAT is paid or we pay everythingAs long as a good or service is delivered to us, we are the ones who make the declaration, in other words, the business owner.

How much VAT is there in Europe

There are different types of VAT in Europe and in Spain: on food, medicine, culture, luxury postage, etc. But there is a VAT rate or rate that all countries have.

In Spain, the VAT caused is 21%, but the member countries of the European Union agreed that the minimum level of VAT when having access in Europe is at least 15%, even though after the crisis that arrived in 2008, almost all the countries have raised rates, as happened in our country, which went from 16 to 21%.

Even so, Spain is below the European VAT average, which is around, on average, 21,48%, to be more specific, it is ranked 12th in the European VAT table.

So that you know better, this is the VAT in Europe, country by country:

Germany	19%
Austria	twenty%
Belgium	twenty one%
Bulgaria	twenty%
Cyprus	19%
Croatia	25%
Denmark	25%
Slovakia	twenty%
Spain	twenty one%
Finland	24%
France	twenty%
Greece	2. 3%
Hungary	27%
Ireland	2. 3%
Italy	22%
Latvia	twenty one%
Luxembourg	fifteen%
malt	18%
Poland	2. 3%
Portugal	twenty%
United Kingdom	twenty%
Czech Republic	twenty%
Romania	24%
Sweden	25%

As you can see, Spain is not at all the country that has the highest VAT in Europe, even when it is close to the average, without reaching the 25% of countries like Sweden or the 27% that Hungary has applied to its inhabitants.

Territories exempt from VAT in Europe

Yes, believe it or not, there are territories that are not obliged to pay VAT in Europe, and have special treatment for belonging to European countries, or for having a special link with the European Union.

Those territories or pay a tax identical to VAT, less than this, or basically do not pay taxes similar to VAT. These are the special territories:

COUNTRY	TERRITORIES
Germany	Helgoland Island and Büsigen Territory
Spain	Ceuta, Melilla and the Canary Islands
France	Guadeloupe, Guyana, Martinique and Reunion
Italy	Livingo, Campione d'Italia and the Italian waters of Lake Lugano
Greece	Mount Athos
Austria	Jungholz and Mittelberg
Denmark	Territory of Greenland and Territory of the Faroe Islands
Finland	Aland Island
United Kingdom	Islas del Channel y Gibraltar

To this list must be added other territories that have special treatment, or special rates, and applied by Portugal, with the Island of Madeira, France with the island of Corsica, or Greece with the islands located in the Aegean Sea.

What is reduced and super-reduced VAT?

There are different VAT rates in Europe and in each country, even as long as the guidelines set by the European Union from Brussels are respected.

One of the types of VAT that govern the life of Europeans is the so-called 'Reduced VAT', which is nothing more than a VAT rate lower than the general one, applied to certain products or services considered basic, such as food, medicine or services such as primary medical care, social assistance, and that changes in each country.

Some countries, like ours, apply another type of VAT called super-reduced to other types of products and services.

The government presided over by Mariano Rajoy Brey increased all VAT tranches, thus remaining at 10% and 4%, respectively, reduced and super-reduced VAT.

The agreement of all the countries of the European Union defines that the reduced VAT must not be less than the 10%, and that the super-reduced, without having established a minimum amount, can only be applied to certain types of products and services.

Bulgaria and Denmark are the only countries at present that have not established either reduced or super-reduced VAT, applying general VAT to all their products and services.

The rest of the countries apply both VAT rates, which are regularly around 10%, and there are some that apply a super-reduced rate of 0%, such as Ireland, Latvia or the United Kingdom.

The VAT revolution in Europe

As is the case in many areas, governments, and the European one is not the exception, take a long time to adapt to the new times, and are left behind in the slowness that characterizes them, and VAT in Europe is no stranger to this.

There are many VAT gaps and areas that it has not managed to homogenize, for example, reduced VAT is applied to physical books, but a digital book is taxed with general VAT, in Spain which, by way of example, means that some are taxed at 4% already the others to 21 %.

Experts foresee an important change, and the European Parliament has already prepared several changes, so that VAT is not easy to evade, and that the European Union does not lose those, more or less, fifty billion euros that do not enter the coffers of governments.

These are the expected changes:

VAT will be paid in the destination country.

Until now, when a product was bought in another country, it was paid in the country of origin, as an example, if in Spain you bought a product in Hungary, in the declaration of the owner of the establishment it will put the VAT in 27% of Hungary, and the Spanish government will forward it to the Hungarian government.

It is a complex system, but it will most likely be implemented in a few years.

VAT in e-commerce

A few years ago, if your online store had a sales volume, for example, in France, that exceeded a certain amount of movement, you had to declare the payment of VAT in France, and so on in each of the countries where the sales were made. sales The volume will increase above the minimum range that each country has.

This is no longer the case, and it is a system very equivalent to the previous one, now the VAT payment is distributed from the country of origin to the destination countries, avoiding that the self-employed and companies have to make different declarations in different countries.

Review of reduced and super-reduced VAT

An excuse for Brexit was that it was not feasible for an e-book to have more VAT than a physical book, or that tampons or sanitary pads were not classified within the super-reduced VAT, and it is a very widespread complaint in Europe.

A more common review of all the products or services of this VAT is proposed to avoid gaps in products such as those mentioned previously.

There are more changes, but we think that with all this you have a pretty broad idea of what VAT is and how VAT works in Europe and the changes that will inevitably happen.