VAT Rates in the EU Member States in 2021

VAT Rates in the EU Member States in 2021

What is the Value-Added Tax rate that applies to cut flowers..? Does the same VAT rate apply to herbs and greenery? How has COVID-19 affected VAT rates? And why is the consumption tax so much lower in my neighboring country?

Florint regularly receives questions from its member associations and affiliated florists about tax rates. That is not surprising: taxes are a complicated subject. And even more so in the European Union, where rates are determined at both the EU and the country-level, and some countries employ up to 4 different VAT rates. We try to answer your most common questions in this article.

What are the current VAT rates in 2021?

The easiest answer to this question is this handy infographic, courtesy of Taxfoundation.org. It tells you the standard VAT rate in each EU member state in January of 2021, and ranks the countries from lowest (light green) to highest (dark green):

(click to enlarge)

What about reduced VAT rates ?

There are many product groups that have reduced VAT rates in various states. Sometimes, floriculture products are included in these product categories with reduced rates. At other times, they are not. This is where a lot of the confusion stems from.

Do you want to know which goods or services fall under the reduced rates? You can look this data up for each country here on Avalara.com.

What about VAT reductions due to the COVID-19 pandemic?

To quote the Tax Foundation once more:

Several countries implemented temporary VAT rate changes due to COVID-19. VAT rate cuts on goods and services sold by industries particularly affected by the economic fallout of the pandemic—such as the hospitality sector—were most common. Two EU countries took a broader approach: Germany reduced its standard VAT rate from 19 percent to 16 percent and its reduced VAT rate from 7 percent to 5 percent from July 1 to December 31, 2020. Ireland reduced its standard VAT rate from 23 percent to 21 percent from September 1, 2020 to February 28, 2021.

Information

To view all the changes in VAT rates specifically due to COVID-19, have a look at Avalara.com. This useful website shows all the 2021 VAT rate changes per country, in alphabetical order!

How did these different VAT rates get established anyway?

That’s a long story of democratic compromise, with many chapters. In short: the European Union has a VAT directive that sets the framework for the VAT rates in the member states. The states then decide their standard, reduced, and special rates. The European Commission explains the basics succinctly on its website.

Do you enjoy long stories and want the historical, detailed version of how the VAT rates evolved? In that case, we recommend this resource here.

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