Your company may be exempted from VAT, depending on its turnover: check the thresholds for basic VAT exemption in Europe.From what amount of turnover does your company have to register for VAT in its country, collect and pay VAT ? Each country of the European Union applies a different threshold of basic VAT exemption. What are these thresholds for VAT registration in the European Union in 2022, what are the practical consequences, which companies are concerned by the application of those thresholds… Find out in this article.
VAT registration thresholds in the European Union
The VAT registration thresholds applicable in the European Union (EU) countries in 2022 are as follows:
| Country | Code | Super-reduced rate (%) | Reduced rate (%) | Parkign rate (%) | Standard rate (%) | UE | Changes 2021 |
|---|---|---|---|---|---|---|---|
| Austria | AT | – | 10% / 13% | 20% | x | ||
| Belgium | BE | – | 6% / 12% | 21% | x | ||
| Bulgaria | BG | – | 9% | 20% | x | ||
| Cyprus | CY | – | 5% / 9% | 19% | x | ||
| Czech Republic | CZ | – | 10%/15% | 21 | x | ||
| Germany | DE | – | 7% | 19% | x | ||
| Denmark | DK | – | – | 25% | x | ||
| Estonia | EE | – | 9% | 22% | x | ||
| Greece | EL | – | 6% / 13% | 24% | x | ||
| Spain | ES | 4% | 10% | 21% | x | ||
| Finland | FI | – | 10% / 14% | 25,50% | x | ||
| France | FR | 2,10% | 5,5% / 10% | 20% | x | ||
| Croatia | HR | – | 5% / 13% | 25% | x | ||
| Hungary | HU | – | 5% / 18% | 27% | x | ||
| Ireland | IE | 4,80% | 9% / 13,5% | 23% | x | ||
| Italy | IT | 4% | 5% / 10% | 22% | x | ||
| Lithuania | LT | – | 5% / 9% | 21% | x | ||
| Luxembourg | LU | 3% | 8% | 17% | x | ||
| Latvia | LV | * | 5% / 12% | 21% | x | ||
| Malta | MT | – | 5% / 7% | 18% | x | ||
| The Netherlands | NL | – | 9% | 21% | x | ||
| Poland | PL | – | 5% / 8% | 23% | x | ||
| Portugal | PT | – | 6% / 13% | 23% | x | ||
| Romania | RO | – | 5% / 9% | 19% | x | ||
| Sweden | SE | – | 6% / 12% | 25% | x | ||
| Slovenia | SI | – | 5% / 9,5% | 22% | x | ||
| Slovakia | SK | – | 10% | 20 | x | ||
| Northern Ireland | XI | 5% | 20% | x |
Why are the non-applicable VAT thresholds different within the European Union (EU)? (EU)
The Council Directive 2006/112/EC of 28 November 2006 declares that countries may grant VAT exemption to small businesses.- The standard threshold for the basic VAT exemption provided for by the European directive is set at 5,000 euros.
- It is also assumed that countries may, within the limits and conditions foreseen by the directive and after consultation with the VAT Committee, request to apply a higher derogation threshold (see in the spreadsheet above).
What is the purpose of these VAT thresholds?
Advantages: VAT-free businesses invoice their customers tax-free (HT). They do not collect or remit any VAT. They do not need to identify themselves for VAT purposes in their country. Disadvantage: companies that operate under the basic VAT exemption cannot deduct or recover VAT on purchases of goods and services made in connection with their business.Companies whose turnover does not exceed the VAT registration threshold of their country can invoice without tax. Not registered for VAT, they cannot collect, pay, deduct or recover VAT.
Attention: these thresholds do not apply to foreign companies!
Companies liable for VAT in a country where they are not established cannot benefit from the local threshold of the basic VAT exemption. In other words, these thresholds only apply to companies in their country of establishment. Example: a French company carries out taxable operations for which it is liable for VAT in Italy. The company’s turnover on the Italian market is lower than the threshold for the Italian VAT exemption. Although the French company has a turnover lower than the local VAT exemption threshold, as the company is not established in Italy, the threshold does not apply to it. The company must therefore register for VATin Italy to declare and pay back the collected VAT, but will not benefit in any case from the basic VAT exemption.Companies that carry out taxable transactions in countries where they are not established and for which they are liable for VAT cannot benefit from the basic VAT exemption. They must identify themselves for VAT purposes in these countries in order to fulfill their VAT obligations.
Find out more
Consult our VAT guide to understand your VAT obligations in Europe.
Quickly check if your company needs to identify itself for VAT in another country with our VAT simulator.
Transaction analysis, VAT registration, VAT returns,Intrastat& ESL returns , VAT recovery: a simple and efficient solution is to appoint a fiscal agent or representative .
