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Taxation and Customs Union

Value Added Tax (VAT)

A consumption tax on goods and services bought and sold within and into the EU

Value Added Tax (VAT)

Looking for VAT information for businesses? Visit the page VAT  for businesses

Looking for VAT information for individuals? Visit Your Europe website. 

Value Added Tax (VAT) is a consumption tax on the value added to nearly all goods and services bought and sold in and into the European Union. VAT is an important own resource for the EU budget. 

VAT is

  • an indirect tax on the vast majority of goods and services 
  • borne by the final consumer, not by businesses
  • charged as a percentage of the sales price and collected fractionally at every stage of production and distribution
  • neutral, as the tax borne by the final consumer is the same regardless of the length of the supply chain

Goods sold for export or services sold to customers outside the EU are normally not subject to VAT. However, VAT is charged on most imports into the EU. 

Learn more about how VAT works.

 

VAT Legal framework

The main piece of legislation on Value Added Tax (VAT) is the EU VAT Directive. Each Member State is responsible for transposing the Directive into national legislation and correctly applying it within its territory. Visit our page on country-specific information on VAT to learn more.

 More about VAT Legal framework

EU VAT rules per topic

VAT covers a wider range of topics, including but not limited to, taxable transactions, taxable persons, chargeable event, rates, and exemptions.

More about EU VAT rules by topic

VAT Special Schemes

In certain circumstances, special schemes are in place to simplify VAT implementation, reduce administrative burden or reduce VAT compliance costs. These schemes target, among others, specific transactions (One Stop Shop), small businesses, farmers and travel agents. 

More about VAT Special Schemes 

VAT One Stop Shop

As of 1 July 2021, new VAT rules on cross-border business-to-consumer (B2C) e-commerce are in place. The aim is to reduce barriers to cross-border online sales and address the challenges of distance sales and importing low-value consignments. 

Visit the VAT One Stop Shop

VAT Committee

The VAT Committee is an advisory body tasked to give guidance and advice on the application of the VAT Directive. It was set up under Article 398 of the Directive to promote uniform application of the Directive’s provisions. It has no legislative powers and cannot take legally binding decisions.

More about the VAT Committee

Expert Groups

  • The VAT Expert Group (VEG) advises the Commission on the preparation of new VAT legislative acts and other policy initiatives, on the practical implementation of legislative acts and on other VAT administration issues and good practices. The VEG is composed of individuals appointed in their personal capacity and organisations representing businesses and tax practitioners.

    More about the VEG

  • The Group on the Future of VAT (GFV) advises the Commission on the preparation of new VAT legislative acts and other policy initiatives, on the practical implementation of legislative acts and on other VAT administration issues and good practices. 

    The GFV is composed of representatives of national tax administrations. The meeting documents and the minutes of the meetings are available on CIRCABC.

    More about the GFV

VAT in the Digital Age

On 8 December 2022, the European Commission proposed a series of measures to modernise, simplify and strengthen the VAT system through digitalisation, while fighting VAT fraud. The proposal put forward a vision for an updated VAT system based on: 

  • cross-border business-to-business e-invoicing 
  • real-time digital reporting 
  • updated rules for platform economy operators in certain sectors 
  • a single VAT registration in the EU 

More about VAT in the Digital Age 

Find the frequently asked questions (FAQs) about VAT on the How VAT works page.