Throughout this year, one development we’ve seen substantially increase is the use of targeted VAT rate changes by governments around the world. Given the large proportion of transactions in an economy that attract VAT, these changes are used as a key tool in economic stimulation, especially as economies throughout Europe slowly start to re-open following the COVID-19 pandemic. These rate changes have taken a few key forms. They may be a temporary broad based reduction in the standard and reduced rates of VAT (as in Germany), targeted reductions to key sectors of the economy (food, beverage and entertainment in Austria), or a deferral of a proposed increase to a rate (Italy).
Source: SOVOS
