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A timely update from the ACCA:

Following numerous announcements concerning VAT in Europe, we summarise the most significant changes. 

Alongside the commentary below, ACCA provides analysis of VAT rates in 27 European Union countries, covering areas such as:

  • what VAT is called
  • the EU country code
  • the standard rate of VAT
  • the form of the VAT registration number
  • the normal filing period
  • government website details to access further information. 

Spain

In a previous announcement, Spanish VAT was due to rise by 1%; this has now been amended to a 3% rise.  Announced after government approval on 13 July 2012 the 3% rise will come into effect from 1 September 2012 and will bring the Spanish standard rate of VAT to 21% (previously 18%). There will be a similar rise in the reduced rate of VAT from 8% to 10% in September 2012. There are no proposed changes to the super reduced rate of 4%.

The government has attributed the rise to deteriorating economic conditions, made worse by the recent €100m bailout from the European Central Bank. 

Italy

The planned standard VAT rate rise – scheduled for September – has been delayed until July 2013. The conditions of the country have not worsened in accordance with government estimates, hence the delay in the VAT rate rise. The proposal is to raise the standard rate of VAT from 21% to 23% from July 2013. There will be a similar rise in the reduced rate, rising from 10% to 12%.

Due to the length of time till July 2013 this may change and will depend upon how the Italian economy shifts.  If the government projections are met the VAT rates will be reduced from January 2014, with the standard rate dropping to 22% and the reduced rate dropping to 11%.

This delay in the rate rise and the proposed later reduction has gone against the recent VAT rate rises across Europe and is based on the direction the government is taking to cut expenditure further.

Holland

There is planned standard VAT rate rise from 1 October 2012. The VAT rate will rise by 2% to 21%, thus bringing the rate in line with other European VAT rates. The aim of the government is to bring the 2012 deficit below the 3% GDP, one of the European currency membership pact conditions.

The other reason for the change is to maintain the Dutch AAA credit rating. In addition to this the VAT rate on theatre and concert tickets will now be standard rated, previously reduced rate. 

Finland

There will be a 1% increase to Finnish standard rate of VAT to 24% from January 2013. While there is not a government debt issue as in other European countries, Finland has an ageing population and low growth prospects. The other reason for the change is to maintain the Finnish AAA credit rating.