- Starting January 1, 2025, the EU’s VAT Rates Directive will allow Member States to apply reduced VAT rates more equitably
- Reduced rates can be applied to 24 categories, including essentials like children’s clothing, food, and cultural items
- Zero rates allowed for up to 7 basic categories
- Digital services like internet access and live-streamed events will qualify for reduced rates
- Standardizes VAT rules across the EU, granting Member States more flexibility
- New rules aim to harmonize reduced VAT rates across all Member States
- Member States can operate up to two reduced VAT rates of not less than 5%
- Introduction of a possibility for all Member States to apply one extra reduced rate of less than 5% and an exemption with the right to deduct input VAT
- Lower than 5% rate and zero rate can only be applied to 7 specific categories of goods and services
- Exceptions to the rule for reduced VAT rates on electronically supplied services will be expanded by 2025
Source: essentiaglobalservices.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
