Standard VAT vs Reduced VAT Rates
Compare standard and reduced VAT rates across EU/UK: eligibility, product categories, and compliance implications.
VAT Rate Overview
Standard VAT Rate
The default VAT rate applied to most goods and services. Varies by country from 17% (Luxembourg) to 27% (Hungary). EU minimum is 15%.
Pros
- ✓Simple to apply
- ✓No classification needed
- ✓Universal applicability
Cons
- ✗Higher rate increases consumer price
- ✗Competitive disadvantage vs reduced-rate goods
Best for: Most goods and services
Cost: 17-27% depending on country
Setup: Default rate
Reduced VAT Rate
Lower VAT rates for specific categories: food, books, children's clothing, medical devices, hotel accommodation. Varies significantly by country.
Pros
- ✓Lower consumer price
- ✓Competitive advantage
- ✓Supports essential goods
Cons
- ✗Complex eligibility rules
- ✗Varies by country
- ✗Product classification disputes
- ✗Must verify eligibility
Best for: Food, books, children's products, medical
Cost: 0-15% depending on country and category
Setup: Requires classification review
FAQ
How do I know if my product qualifies for reduced VAT?+
Check each country's VAT legislation for eligible product categories. For example, in Germany, food is 7% (reduced) vs 19% (standard). In France, books are 5.5%. Classification depends on the product's nature, not the seller's choice.