Tax & Accounting Blog

EU VAT Rate and Rule Changes in Summary at the Beginning of 2011

Indirect Tax, VAT Tax Rates January 12, 2011

Changes to the EU VAT rates and rules in several EU countries has taken place as of January 2011.

The most noted change has been the increase of the standard VAT rate in the UK as of 4 January 2011 from 17.5% to 20%.

Greece increased the reduced VAT rate from 11% to 13% and the lower reduced rate from 5.5% to 6.5% effective 1 January 2011.  As a result of these increases the corresponding reduced and lower VAT rates in the Aegean Islands are increasing from 8% to 9% and 4% to 5% as of 1 January 2011.

Latvia increased both the standard VAT rate from 21% to 22% and the reduced VAT rate from 10% to 12% effective 1 January 2011.

Poland increased the standard VAT rate from 22% to 23%, the reduced VAT rate from 7% to 8%, and abolished the 0% and 3% rates.  Some of the goods and services that were taxed at the 0% and 3% will be taxed at the new 5% VAT rate, however most products and services default to the reduced VAT rate of 8%. These changes are effective as of 1 January 2011.

Portugal increased the standard VAT rate from 21% to 23% effective 1 January 2011.  With that the Portuguese islands of Madeira and Azores had their standard VAT rates increased from 15% to 16 % effective 1 January 2011.

Slovakia increased the standard VAT rate from 19% to 20% and abolished the lower VAT rate of 6% as of 1 January 2011.

Cyprus abolished the exemption on foods and medicine and as of 10 January 2011 these items shall be taxed at 5%.

Malta increased the reduced VAT rate that applied on hotels from 5% to 7% as of 1 January 2011.

Bulgaria also legislated an increased of the reduced VAT rate applied on hotels from 7% to 9%.  That increase will be effective as of 1 April 2011.

In addition Belgium issued a decree extending until 30 June 2011 the application of the lower VAT rate of 6% with respect to the taxing renovations of old homes and repairs of bicycles, clothes, and shoes.

Lithuania has also extended its temporary VAT rate of 5% until the end of 2011.