Which EU country has the highest VAT rate?

Hungary has the highest standard VAT rate in the EU at 27%, a rate it has maintained since 2012.

Which EU country has the lowest VAT rate?

Luxembourg has the EU's lowest standard VAT rate at 17%, followed by Malta at 18%.

Does the EU set VAT rates for all countries?

The EU sets minimum rates (at least 15% standard, at least 5% reduced) but each member state sets its own actual rates within those limits. This is why rates range from 17% in Luxembourg to 27% in Hungary.

Are VAT rates the same across all products in an EU country?

No. Most EU countries have multiple rate tiers. The standard rate applies to most goods and services, but reduced rates apply to essentials like food, medicines, books, and public transport. Some countries also have super-reduced rates on the most basic necessities.

EU VAT Rates by Country 2026 — All 27 Member States

How EU VAT Rates Work

The EU VAT system is harmonised under the EU VAT Directive (2006/112/EC), which sets the rules that all 27 member states must follow. However, within those rules, each country sets its own rates — subject to a minimum standard rate of 15% and a minimum reduced rate of 5%.

Most EU countries operate two or three tiers of VAT rates: a standard rate that applies to most goods and services, one or two reduced rates that apply to essentials like food, medicines, and books, and in some countries a super-reduced rate on the most basic necessities. Denmark is the only EU country with a single flat rate — 25% — and no reduced rate.

Highest and Lowest VAT Rates in the EU

Highest standard rates: Hungary (27%), Denmark and Sweden (both 25%), Croatia and Finland (both 25.5% and 25% respectively).

Lowest standard rates: Luxembourg (17%), Malta (18%), Cyprus and Germany (both 19% — though Germany's rate has been debated for years).

Most reduced rate categories: France and Ireland have the most complex rate structures, with five separate rate tiers applying to different goods and services.

Broadest zero-rating: Ireland zero-rates the most goods of any EU country, including most food, children's clothing, oral medicines, and books — a legacy of derogations maintained since EU accession in 1973.

Why VAT Rates Matter for Your Business

VAT rates affect your business in several ways:

Pricing: If you sell B2C to EU consumers, your gross price includes local VAT. A product priced at €100 net costs your German customer €119 (19% VAT) but your Swedish customer €125 (25% VAT). Competitive pricing across the EU requires understanding these rate differences.

Cash flow: VAT is collected on behalf of the tax authorities — it is not your revenue. High-rate countries like Hungary (27%) mean a larger VAT liability to manage and remit.

Rate classification: Getting the rate wrong — applying the standard rate to goods eligible for a reduced rate, or vice versa — creates compliance risk. Reduced rate eligibility rules vary significantly between countries.

OSS reporting: When filing OSS returns, you must apply the correct rate for each EU country to each type of supply. Errors in rate application are a leading cause of OSS audits.

Recent Rate Changes (2024–2026)

VAT rates across the EU have been more volatile in recent years as governments balance fiscal consolidation with cost-of-living pressures:

Estonia: Raised standard rate from 20% to 22% on 1 January 2024, citing defence spending needs.

Finland: Raised standard rate from 24% to 25.5% on 1 September 2024, one of the EU's largest single rate increases in recent years.

Croatia: Joined the Eurozone on 1 January 2023 — VAT obligations are now in Euros rather than Kuna.

Latvia: Introduced a 5% reduced rate on fresh fruit and vegetables.

Always verify current rates before filing — VATToolkit updates rates annually, but mid-year changes do occur.