How to pay VAT in Europe

Laws on VAT in Europe can be confusing, particularly for foreign sellers who find themselves having to calculate taxes based on international sales. As a result, we’ve put together this handy guide on European VAT, to compliment our country-specific content.


What is the VAT rate in Europe?

The European Union does not yet apply a single VAT rate to all of its member states. VAT rates in the 28 member states ranges between 17% (Luxembourg) and 27% (Hungary).

They do however use the same rules to apply and collect VAT. This is what allows the MOSS service to calculate VAT across multiple jurisdictions.


What is MOSS VAT (Mini One Stop Shop)?

MOSS VAT is a system designed to help businesses pay VAT to multiple EU jurisdictions.

It became particularly vital with the advent of the EU’s digital services directive, which required businesses to pay VAT on digital goods at the point of sale.

For more information on MOSS and how to apply, visit our MOSS VAT page or get in touch.


What are the VAT limits in the EU?

EU VAT thresholds for distance selling vary by country. The average limit is 35,000 euros, but ranges from 26,000 euros in Romania (after conversion) to 100,000 euros in Germany.


How do I register for VAT in Europe?

If your business has offices located in a European territory, you will have to register for VAT in that country. The local treasury website will usually have more information, and often a means of signing up and paying VAT online.

If you do not have offices in Europe, you can usually apply to pay VAT in any territory through a ‘Mini One Stop Shop’ (MOSS) service. This calculates the VAT you are liable for when selling to various European nations.

Many American businesses previously chose to register with MOSS in the UK, thanks to the shared language. However, Brexit has cast doubt on the UK’s continued participation in the MOSS scheme. Other English language MOSS schemes include those in Ireland and Malta.


What does ‘zero rated’ mean?

Zero rated good and services are unique to a handful of EU countries, including the UK and Ireland, who impose them through individual treaties. These count as 0% positive tax rates, and are technically a VAT charge.

These rates are effectively the same as VAT exemptions, but they can be raised at any time. They cannot however be subsequently lowered, meaning a move from 0% to 5% is permanent.


Is this the same as VAT exempt?

No. Sellers of VAT exempt goods are not eligible for VAT refunds, whereas sellers of zero rated products are. The EU is actively attempting to reduce the number of exemptions and zero rated goods, and may get its wish when the UK leaves the Union.


For any more information on paying or calculating VAT in Europe, don’t hesitate to contact us.