VAT, or value added tax, is an indirect tax that is levied on most products and services sold in the European Union. VAT rates applied in the EU vary from country to country but are between 15 and 27%.
VAT rate changes
In this blog post, we will delve into the world of ESG ratings and understand why they matter for companies and investors alike. The beginning of a new year often brings changes to various tax laws and policies around the world, and 2024 will be no exception. Effective January 1, 2024, a number of countries will introduce changes to their Value Added Tax (VAT) or GST rates which you need to know to stay compliant. These changes are driven by a variety of factors, including the desire to simplify the VAT system, promote economic growth or support certain economic sectors.
Czech Republic
On November 22, 2023, the Czech Republic’s President endorsed a budget law unifying the reduced rates of 15% and 10% into a singular reduced rate of 12%, effective January 1, 2024.
Estonia
The Estonian Parliament, on June 16, 2023, approved legislation raising the standard VAT rate from 20% to 22%, taking effect on January 1, 2024. Furthermore, commencing January 1, 2025, reduced VAT rates for both printed and electronic press publications will increase from 5% to 9%, while rates for accommodation services will elevate from 9% to 13%.
Luxembourg
The temporary 1% VAT rate deduction on standard and reduced rates, established by the Law of October 26, 2022, will expire at the year’s end. From January 1, 2024, the rates will revert to 17%, 14%, and 8%, respectively.
Switzerland and Liechtenstein
Following a September 25, 2022, referendum, Switzerland decided to raise VAT rates from January 1, 2024. The standard rate will climb from 7.7% to 8.1%, the reduced rate from 2.5% to 2.6%, and the special rate for accommodation services from 3.7% to 3.8%. These adjustments will also be applicable in Liechtenstein due to the shared VAT system.
