On 6 April 2022, an adjustment to the European Union (EU) Value-Added Tax (VAT) Directive was published in the Official Journal (pdf).
Amended EU rules on VAT rates
- Under the amended rules, EU Member States will be able to apply up to five VAT rates depending on the product or service:
- One standard rate
- Two reduced rates of no less than 5%, whereby these rates may be applied to a maximum of 24 points from (the amended) Annex III of the Directive; “points” are categories of goods and/or services in that Annex, e.g., children’s clothing and footwear; supply of children’s car seats or hairdressing
- A reduced rate of less than 5%, only applicable to a maximum of seven specifically designated points from (the amended) Annex III, may be applied
- An exemption with the right to deduct, only applicable to a maximum of seven specifically designated points from (the amended) Annex III may be applied
Source EY
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