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What VAT rate should I apply to my goods?

Note 

Note

Avalara AvaTax is a tax compliance solution that automates the complexities of calculating sales tax, VAT, and GST. Please ask your Customer Account Manager about Avalara AvaTax and how it can help with your VAT calculations.

Depending on the particular country, certain goods are charged at the standard VAT rate, certain goods at a reduced rate, and other goods are zero-rated. For goods-related reduced VAT rates, often countries will have a number of different reduced VAT rates depending on the type of goods being taxed.

Some examples are listed below, these are common examples, actual exemptions and VAT rates will differ from country to country:

  • Standard VAT rate: Any goods not covered by a zero or reduced VAT rate.
  • Reduced VAT rate: Certain foodstuffs ad social services.
  • Zero-VAT-rated: Books, children's clothing, and certain pharmaceutical products. 

See the Avalara VATLive website for more information on VAT rates.

EU VAT Rates

The EU sets the broad VAT rules through European VAT Directives, and has set the minimum standard VAT rate at 15%. The 27 member states (and the UK) are otherwise free to set their own standard VAT rates. The EU also permits a maximum of two reduced rates, the lowest of which must be 5% or above. Some countries have variations on this, including a third, reduced VAT rate, which they had in place prior to their accession to the EU.

See the Avalara VATLive website for more information on VAT rates.

Distance sales

For distance sales, taxation is in accordance with the tax rate of the country of dispatch, dependent on if they are standard or reduced rated goods. However, if you have breached or opted out of the distance selling threshold, the VAT rate of the destination country applies. Please see Distance Sales threshold and Tax in Destination Country for more information.

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