VAT, or value added tax, is an indirect tax on consumption paid by the end consumer of a good or service. Established for the first time in France in 1954 on the initiative of the French senior civil servant and tax expert Maurice Lauré (1917-2001), the VAT will gradually be applied in France to goods and services. From 1967, it will be gradually adopted by the other states of the European Union.
In the European Union, the VAT rate is freely set by each member state following harmonization recommendations. The amount of the normal rate must not be lower than 15%, and each state can decide on two reduced rates which cannot be lower than 5%. In the European Union, the lowest standard rate is 17% in Luxembourg, the highest being 27% in Hungary.
Taxation mechanisms similar to VAT have gradually been introduced by many states around the world. Today, 166 countries around the world apply a VAT system. The highest standard rate is applied in Hungary at 27%, the lowest being 4.5% in Andorra.
The 27 member states of the European Union freely apply various VAT rates, which are however regulated by European harmonization recommendations. The standard rates vary from 27% (Hungary) to 17% (Luxembourg). A 0% rate is applied in Livigno, Italy.
Standard French VAT (TVA) rate in 2024 is 20%. France reduced VAT rates are 10%, 5.5% and 2.1%
Standard Germany VAT MwSt./USt.rate in 2024 is 19%. German reduced VAT rate is 7%
Standard Slovenia VAT (DDV) rate in 2024 is 22%. Slovenian reduced VAT rate is 9.5%
Standard Croatia VAT (PDV) rate in 2024 is 25%. Croatian reduced VAT rates are 13% and 5%
Standard Malta VAT (VAT) rate in 2024 is 18%. Maltese reduced VAT rates are 7% and 5%
Standard Greece VAT (ΦΠΑ) rate in 2024 is 24%. Greek reduced VAT rates are 13% and 6%
139 countries in the world have adopted a system equivalent to the European VAT system. The standard rates vary from 25% in Norway and the Faroe Islands to 4.5% in Andorra.
Calculate VAT and Gross Amount:
Incl. = Excl. + [(Excl./100) x VAT%]
Calculate the VAT backwards and net amount with a formula to exclude the tax amount:
Excl. = [Incl./(100+VAT%)] x 100
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