by Jonny Steel, VP Sales & Marketing, VATBox
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2014 – Latest Changes Across Europe
According the EY Global Survey on VAT/GST changes in November 2013, carried out in 96 countries, changes in VAT rates happen very often! In some countries it happens as often as monthly, and in three out of four countries, it happens at least once a year. That’s a lot of changes to stay on top of!
Some changes have a major impact on certain industries. For example, an EU change in VAT rules will move taxing rights on cross-border sales of
telecoms, broadcasting and digital services such as e-books, apps, and cloud storage services to the countries where customers, rather than companies, are based. This change will redistribute VAT revenues across Europe, push up the prices of many digital products and reduce the competitive edge of operating offshore.
The incentive for businesses such as Amazon, Apple and Microsoft to be based in a low VAT jurisdiction like Luxembourg will disappear, driving hundreds of millions of e-commerce VAT back to the UK Treasury. Luxembourg in turn is expected to lose more than €700 million of VAT revenues, a factor in their decision to raise their standard rate VAT from 15% to 17% next year.
European VAT Rate Changes: The Highlights
Where is VAT on the Rise?
• France – From 1 January 2014, standard rate VAT increased from 19.6% to 20% and reduced rate 1 increased from 7% to 10%.
• Italy – On 1 October 2013, standard rate VAT went up from 21% to 22%.
• Luxembourg – In 2015, all rates are going up. Standard from 15% to 17% and reduced rate from 6% to 8%.
• Poland – The temporarily higher rates of 23% (standard rate) and 8% (reduced rate) have now been extended to last until the end of 2016.
• Spain – Since the start of 2014, the standard rate was extended to cover e-books and digital newspapers.
• Belgium – As of 1 April 2014, many services performed by lawyers will be taxed at full 21% rate when previously they were exempt.
• Cyprus – From 1 January 2014, the standard VAT rate increased from 18% to 19% and the reduced rate increased from 8% to 9%.
• Montenegro – From 1 July 2013, the standard VAT rate increased from 17% to 19%.
• Serbia – From 1 January 2014, reduced VAT rate of 8% increased to 10%.
And Where has VAT been lowered?
• Ireland – The temporarily reduced rate of 9% on tourism and hospitality services which was due to expire at the end of 2013, has been extended for an undetermined period.
• Greece – From 13 August 2013, a temporarily reduced rate of 13% for catering services such as restaurants and hotels (down from 23%) has been extended to include all of 2014 as well. However, take away is not included.
• Netherlands – From 1 January 2014, the temporarily reduced rate of 6% on rebuilding and renovations was extended through to the end of 2014.
• Romania – From 1 September 2013, bakery products like bread, wheat and flour which were previously standard rated were lowered to the reduced VAT rate of 9%.
Up and Down!
• Czech Republic – From 1 January 2016, the standard rate of 21% and reduced rate of 15% will be replaced by one uniform rate of 17.5%.
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