VAT Around the World: What’s Different, and What’s the Same?

Value Added Tax, or VAT, is one of the most common types of tax worldwide. You’ll find VAT charged in most of the countries you might visit as part of your business travel – in 160 countries and counting, to be precise. The prevalence of VAT around the world makes it even more important that your business takes advantage of the VAT refund options.

VAT is a tax that’s added on to goods and services and charged to the end customer, but if you’re visiting as part of your business travel, your company can submit a VAT return to make a VAT reclaim.

Which countries charge VAT?

Instead of charging VAT, some countries charge a different end tax on goods and services, which is called the Goods and Sales Tax, or GST. Although there are some similarities with VAT, this article will only focus on those countries which charge VAT.

VAT is a tax that varies significantly between countries. In some countries, standard VAT rates are as much as 27% VAT on your business travel goods and services! Certain countries charge VAT at a much lower rate of 5%, and in other places you’ll find tax rates at anything in between. Although you want to make sure to submit a VAT reclaim for all your business travel expenses, it’s also useful to know which countries worldwide have the highest and lowest VAT rates. Here is a deep dive into the highest and lowest rates for VAT around the world, as well as the global average VAT charges:

Lowest VAT Rates

In the Middle East, the Gulf states have recently introduced VAT. This is due to the drastically reduced price of oil, which has made it difficult for these states to meet their budgets without some kind of sales tax. VAT in these countries is still very low. In 2018, the United Arab Emirates became one of the first Gulf states to charge VAT, at a rate of 5% on some goods and services, like food, cars, and entertainment. Many other items are still VAT-free.

If you’re hoping to make a VAT reclaim from the UAE, bear in mind that only businesses in some countries can claim a VAT refund for business travel expenses. These countries include:

  • Austria
  • Bahrain
  • Belgium
  • Denmark
  • Finland
  • France
  • Kuwait
  • Iceland
  • Isle of Man
  • Lebanon – in certain circumstances
  • Luxembourg
  • Namibia – the details: VAT refunds from the UAE are only available for business goods that are exported, and not for services consumed in the UAE
  • Netherlands
  • New Zealand
  • Norway
  • Oman
  • Qatar
  • Saudi Arabia
  • South Africa – the details: VAT refunds are only available for expenses relating to goods that are exported from a designated UAE port within 90 days, and does not apply to services
  • Sweden
  • UK
  • Zimbabwe

Businesses in some other countries can claim a VAT refund only in certain circumstances, so you’ll need to check the details before you submit a VAT return for the UAE

Within Europe, Switzerland is the country with the lowest VAT rates, at just 7.7%. For now, these are the places that make the smallest tax dent to your business travel expenses.

Highest VAT Rates

In contrast to the 5% VAT charged in UAE and 7.7% in Switzerland, standard VAT rates in Hungary are an astonishing 27%. Only a very small number of items qualify for reduced rates, making it a very expensive tax country.

Other countries with high VAT rate include:

  • Croatia, Denmark, Norway, and Sweden, where you’ll find standard VAT rates of 25%
  • Finland, Greece, and Iceland with VAT rates of 24%
  • Ireland, Portugal, and Poland, where standard VAT is charged at 23%
  • Italy and Slovenia charge VAT at 22%
  • Latvia, Spain, Belgium, Lithuania, the Netherlands and the Czech Republic, which all charge 21%
  • France, Austria, Estonia, Ukraine, Slovakia, and the UK all charge 20% VAT

If your business travel takes you to these places, make sure to keep your VAT receipts, because at these high rates, your business will want to maximize their VAT reclaims.

All the rest

In most of the 160 countries that charge VAT, you’ll find tax rates that range from 15% to 19% on the majority of taxable goods and services.

Whether you’ve paid a high or a low amount of tax in VAT charges, you’ll want to maximise your VAT reclaim. For all the details about filing successful VAT returns in the EU and other countries around the world, download our eBook.

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