EU: Report on deviations by member states from standard VAT rates
Report shows disparities in application of tax rate exceptions across member states.
The European Commission (EC) issued a report detailing the extent to which different EU member states deviate from EU standard value added tax (VAT) rates.
According to the related EC release, the report shows that just three countries—Luxembourg, Ireland, and Italy—account for 75% of the current 64 deviations, while seven others (Malta, Cyprus, Greece, France, Portugal, Spain, and Austria) cover the remaining 25%.
Background
Under the EU’s VAT Directive, member states may set VAT rates and apply them to specific goods and services within a structured framework. The standard rate must be at least 15%, while reduced rates—up to two at a minimum of 5%—can be applied to supplies in up to 24 categories listed in Annex III (e.g., books, medicines).
Following the 2022 reform (Council Directive (EU) 2022/542), member states may also apply a super-reduced rate below 5% or a zero rate for up to seven categories of essential goods and services, such as food and pharmaceuticals. Additionally, member states may apply reduced "parking rates" (minimum 12%) to goods and services outside Annex III, with transitional provisions for phasing out preferential treatment for environmentally harmful supplies.