VAT Registration Threshold of EU Countries
The European Union is a collective but its Member States have their own rules and nuances where VAT is involved. Knowing what rules are at play is essential when trading in the EU, and that’s where Sovos’ EU VAT Buster comes in.
Each Member State has its VAT threshold for sales. Though, collectively, things changed when the EU VAT Reform came into force. Bookmark this blog so you always have the key facts available when dealing with EU VAT.
What is the VAT registration threshold for EU countries?
For intra-EU B2C supplies, the VAT registration threshold in the EU changed on 1 July 2021. The EU introduced a new lower threshold of €10,000 for businesses established in the region, while a threshold does not govern those outside the region.
For European businesses, that threshold applies annually and is related to all sales in the EU. There is no revenue threshold for non-European companies, and they must be VAT registered in all Member States they sell within.
For other activities, many EU Member States have domestic supplies for established companies, whereas in most instances non-established companies do not benefit from any threshold.
The table below highlights a selection of EU Member States and the VAT number format for the country.
VAT by Country EU
The below table shows VAT details for several countries. The VAT rates were last updated on 17 February 2023 and include the main reduced rates (countries may also have zero rates – read our blog to better understand how VAT works between European countries).
For more information, including relevant data on additional countries, speak to our expert team.
|Country||Current VAT Rate||VAT Number Format|
|Germany||19%||7||Format: Nine characters.
Example: DE 123456789.
|Hungary||27%||5, 18||Format: Eight characters.
Example: HU 12345678.
|Romania||19%||5, 9||Format: From two to 10 characters.
Example: RO 12, 123, 1234, 12345, 123456, 1234567, 12345678, 123456789, 1234567890.
|Spain||21%||4, 10||ES X12345678, 12345678X, X1234567X
Format: Nine characters. Includes one or two alphabetical characters (first or last or first and last).
|Switzerland (non-EU)||7.7%||2.5%, 3.7%||Format: Nine characters, ends with MWST/TVA/IVA.
Example: CHE 123.456.789 MWST.
|United Kingdom (non-EU)||20%||5%||Format: Nine characters.
Example: GB 123 4567 89.
Common terms: Explained
EU VAT is a vast topic, especially considering each country within the union has its own nuances. As such, many questions are asked of us regarding it. Here are some of the most common phrases you may encounter, as well as some frequently asked questions – and the answers.
VAT Destination Principle
The Destination Principle is a concept which allows for VAT to be retained by the country where the taxed product is being consumed. It’s applied to the Goods and Services Tax in India, and on many EU supplies.
VAT Origin Principle
The VAT Origin Principle is a concept which requires that the applicable VAT rate for a transaction is determined by the Member State where the seller is based.
The Union OSS (One Stop Shop) is a scheme for intra-EU business-to-consumer supplies of goods and services. It was introduced in July 2021.
The Non-Union OSS (One Stop Shop) is a scheme for companies that are not established in the EU. It allows them to register and pay VAT for all business-to-consumer supplies of services in a single EU Member State. It was extended from the previous Mini One Stop Shop (MOSS) in July 2021.
All goods imported into the EU are subject to VAT. Businesses selling imported goods under EUR 150 can utilise IOSS (Import One Stop Shop) to simplify their VAT Compliance. To obtain an IOSS VAT registration, most non-EU companies need to appoint an intermediary – such as Sovos.
Marketplaces may become the deemed supplier of some business-to-consumer transactions when they cross borders, taking on VAT obligations. This means that a marketplace would gain responsibility for collecting and reporting VAT from the consumer.
To stay compliant with tax regulations, companies need to know the varying VAT thresholds of the EU Member States. In July 2021, the EU introduced a universal distance selling threshold of €10,000. For other activities, many EU Member States have domestic supplies for established companies, whereas in most instances non-established companies do not benefit from a threshold.
Cross-border supplies involve goods being transported from one country to another. In some cases, goods may cross multiple borders on the journey from the supplier to the final destination of sale. When dealing with cross-border supplies, you may create a requirement to register for VAT.
There are no customs charges when goods are transported from one EU Member State to another. There are customs charges for goods originating outside the EU. Such charges are generated from customs controls at borders and are dependent on a specific set of rules.
In the EU, Import duty is tax payable based on the value of imported goods and can include VAT and customs duties.
Frequently Asked Questions
Which EU country has the highest VAT?
Hungary has the highest standard VAT rate of any European country, sitting at 27%. Croatia, Denmark, and Sweden are joint-second at 25%.
Which EU country has the lowest VAT rate?
Luxembourg has the lowest standard VAT in the EU at 16% for 2023, though this will return to 17% in 2024. No country can charge a standard VAT rate below 15%.
What is the minimum standard rate of VAT applicable in the EU?
No EU Member State can charge under 15% as a standard VAT rate. Luxembourg has the lowest standard rate among the Member States at 16% (albeit temporarily).
Is VAT the same in all EU countries?
Although the European Union has somewhat created a uniform tax protocol, each EU Member State has its own VAT rates.
Do I pay VAT on EU purchases?
If you buy or receive goods for business purposes from another country in the EU, you must pay VAT on the transaction at the rate dictated by the type and place of supply.
What is EU VAT threshold?
Businesses need to know the unique VAT threshold of the EU Member States. As of July 2021, the VAT threshold for distance selling in countries in the EU is €10,000. For other activities, many Member States have domestic supplies for established companies – though, typically, a threshold is not applicable for non-established companies.
Do I need to register for VAT in the EU?
VAT registration is applicable for non-resident companies to trade in a country, with specific requirements outlined by the EU and individual tax authorities.
Interested in finding out more about VAT registration options and the various OSS schemes? Contact our sales team today.