VAT-Checker

VAT stands for Value Added Tax.

VAT is a consumption tax applied to goods and services in European countries. It is charged at each stage of the supply chain, from production to the point of sale. Businesses collect VAT from their customers and pay it to the government while reclaiming VAT on their purchases.

Yes, VAT rates differ among European countries, with each country setting its standard rate, reduced rates, and exemptions. Standard rates typically range between 17% and 27%, and reduced rates apply to specific goods and services. Check this list for the current rates allover Europe.

The standard VAT rate is the general rate applied to most goods and services, while reduced rates are lower rates applied to specific goods or services, such as food, medicines, and public transportation. Some items may be exempt from VAT altogether.

The VAT threshold is a turnover limit set by each European country, above which businesses must register for VAT and charge VAT on their sales. Small businesses with a turnover below the threshold are not required to charge VAT, which can benefit their competitiveness. In Germany, this limit is set to 22.000€ turnover.

The MOSS is a simplified VAT registration and payment system for businesses providing digital services to consumers in the EU. It allows businesses to register and report VAT on digital services in a single member state rather than registering for VAT in each country where they have customers. You can find detailed information here.

For imports, VAT is charged at the point of entry into the EU at the same rate as the destination country. For exports, goods are generally exempt from VAT when sold to customers outside the EU, but businesses may still need to account for VAT on related services, such as shipping.

Businesses can generally reclaim VAT on business-related purchases, such as raw materials, equipment, and services. However, certain expenses, like entertainment or company cars, may limit VAT recovery. Proper documentation is essential to support VAT reclaims. Discussing VAT rules with your accountant, especially in Germany, is crucial.

The reverse charge mechanism applies to B2B transactions between companies in different EU countries, provided each company has a valid VAT number. Check our Guide for more details and to verify a number’s validity. The main purpose of the reverse charge mechanism is to ensure VAT compliance and proper reporting for cross-border B2B transactions within the EU while simplifying the process and avoiding the need for businesses to register for VAT in multiple countries.