Recent VAT rate changes in Europe
VAT has proven to be one of the main sources to increase state revenues after the economic downturn in Europe. Since January 2008, 22 Euro countries have increased their VAT rates. In 5 countries, the VAT rates have increased more than once during the last two years.
The below map shows the evolution of the VAT rate landscape in Europe:
The VAT directive provides a legal framework enabling Member States to decide their VAT rates. The general rule allows Member States to tax their supplies of goods and services from a minimum rate of 15%. Additionally, Member States may apply one or two reduced rates of no less than 5% to goods and services mentioned in a restricted list. There is however a large number of derogations preventing the VAT rate system to be coherent in all EU territories.
The following map gives an overview of the standard VAT rates currently applicable in Europe:
Belgium has not changed its standard VAT rate, currently at 21%, since 1 January 1996. With this change, Belgium positioned itself as from the outset in the category of higher taxed countries. The entry of Eastern European countries with traditionally higher VAT rates in 2004 changed this balance and today, the Belgian standard VAT rate is close to the EU average of 20,9%.
Furthermore, it is interesting to note that the high rate of 25%, considered for years as an (unofficial) maximum rate, is exceeded since Hungary decided to increase the VAT rate to 27% as of 1 January 2012.