VAT Changes and Updates 2024
A number of countries are making changes to their VAT rates and rules in 2024. Here is a rundown of some of the main VAT changes and updates you can expect to see being implemented this year.
Bulgaria
The Bulgarian government has extended the reduced VAT rate of 9% for specific services until December 2024. Initially introduced as a temporary measure during the COVID-19 pandemic, this extension aims to support sectors like restaurants, tourism, and gyms by continuing the reduction from the standard 20% rate.
The reduced rate applies to services such as catering, tourism, books and textbooks, baby foodstuffs and supplies, sports facilities, and gyms. This extension reflects ongoing efforts to bolster these industries in light of the pandemic's impact.
Cyprus
Cyprus has implemented a zero VAT rate on meat and vegetables from December 1, 2023, to May 31, 2024. The zero rate applies to fresh, chilled, or frozen meat including beef, pork, lamb, goat, poultry, and rabbit, as well as edible offal products. It also applies to various fresh or chilled vegetables such as tomatoes, onions, cabbage, lettuce, carrots, cucumbers, and legumes.
Czech Republic
The Czech president signed a budget consolidation package to stabilize public finances and reduce the national deficit. Key changes in the package include merging its two reduced VAT rates into a single reduced VAT rate of 12%.
Food will mainly be taxed at a lower 12% rate, while some services and draft beer are subject to a higher 21% rate. VAT will also increase for public transport, magazines, some medicinal drugs, and cultural and sports event tickets from 10% to 12%. A zero VAT rate for books is also being introduced. The package is expected to have significant economic impacts, raising public finances while critics argue it will burden citizens and harm the economy.
Estonia
The standard Estonian VAT rate has risen from 20% to 22%. The change came into effect on January 1, 2024. The increase aims to balance the state budget by enhancing tax revenue collection.
Finland
As part of the Ministry of Finance's 2024 budget proposal, the Finnish government has reclassified many supplies to higher VAT rates, effective from January 1, 2024.
Notably, items such as books, hotel services, public transport, pharmaceuticals, and entrance to cultural events, among others, have seen an increase from a 10% VAT rate to 14%. Items like tampons and nappies have undergone a VAT rate reduction from 24% to 14%. This adjustment aims to streamline and adjust tax burdens.
Germany
The German government coalition has increased VAT on food in restaurants from 7% to 19% after reducing it during the energy crisis and COVID-19 pandemic. The change came into effect on January 1, 2024.
The temporary reduction of domestic energy VAT from 19% to 7%, which was due to end on December 31, 2023, will now be extended to March 1, 2024. The VAT subsidy was implemented in response to the Russian invasion of Ukraine and the subsequent increase in energy prices.
Greece
Greece has extended its temporary VAT reduction for certain basic supplies until June 30, 2024. This extension, originally implemented in response to COVID-19, includes a reduced VAT rate of 13% on taxis and self-serve coffees. Additionally, the Greek government has made this VAT reduction permanent for urban and suburban transport, rail transport, tour packages, gyms, health supplies, cinemas, and theater tickets. However, the higher VAT rate of 24% will be reinstated for soft drinks.
In 2024, Greece will automatically apply VAT to home rentals within the sharing economy, specifically targeting providers who offer three or more properties. Currently, the VAT rate for accommodation services in Greece is 13%.
Hungary
Hungary is launching the eVAT system from January 1, 2024, the new VAT reporting portal. This new system is set to become available to all VAT-registered taxpayers in Hungary, both established and non-established. It will not be mandatory during 2024, and possibly until at least 2026.
Ireland
Ireland has increased the VAT registration thresholds for resident businesses. The new thresholds are €40,000 for services (up from €37,500) and €80,000 for goods (up from €75,000). These changes, effective from January 1, 2024, aim to provide greater flexibility for small businesses close to the current thresholds.
As of January 1, 2024, the VAT rate on electronic and audio books has been reclassified to zero. Ireland has also extended its temporary VAT reduction on domestic gas and electricity from 13.5% to 9% until October 31, 2024. This measure, initially implemented in May 2022, aims to alleviate financial pressures amidst high inflation.
Latvia
Latvia has increased its VAT registration threshold for resident businesses from €40,000 to €50,000 per annum, starting from January 1, 2024. The threshold for non-resident businesses remains at nil. The VAT rate for fruits, vegetables, and berries has risen to 12% as of January 1, 2024, and will be in place for one year.
Luxembourg
In response to high inflation, Luxembourg's government agreed to temporarily reduce the standard VAT rate from 17% to 16% for the year 2023. This reduction also included cuts in two of the three reduced VAT rates.
Luxembourg's temporary VAT cuts for 2023 ended on January 1, 2024. The new VAT rates for 2024 are as follows:
Standard rate: from 16% to 17%
Intermediate reduced rate: from 13% to 14%
Reduced rate: from 7% to 8%
Super reduced rate (unchanged): 3%
Malta
Malta has introduced a new 12% reduced VAT rate, adding to its existing 7% and 5% reduced rates. This change, effective from January 1, 2024, does not affect the standard VAT rate of 18%. The 12% rate applies to specific services, including the hiring of pleasure boats, certain healthcare services, securities custody services, and specific credit and credit guarantee management services.
Poland
Poland has extended its zero VAT policy on food into 2024, a measure initially introduced in February 2022 to combat surging inflation. Additionally, Polish lawmakers voted to prolong the energy price freeze for the first half of 2024.
Romania
The Romanian government has raised the standard VAT rate from 9% to 19% for certain services and products like sugary non-alcoholic drinks, sugary foods, tourist passenger transport, and sports facility entrance fees. Additionally, the reduced VAT rate increased from 5% to 9% for social buildings, smaller dwellings, amusement parks, cinemas, and cultural events. The changes are effective from January 1, 2024.
Singapore
Effective January 1, 2024, Goods and Services Tax (GST) in Singapore is now 9%, up from 8% in 2023. This update includes guidance for businesses on applying the correct GST rate during the transition period. Additionally, it addresses concerns about potential profiteering by businesses during these changes and emphasizes the need for transparency in pricing.
Slovakia
The Slovakian government has increased the VAT rate on alcoholic beverages. It is now 20%, up from 10%. Effective from July 1, 2024, the annual VAT registration threshold for resident businesses in Slovakia will increase from €49,750 to €75,000. This change is specific to resident businesses, as most non-resident businesses are required to register for VAT from their first taxable supply.
Spain
Spain is set to gradually reinstate a 21% VAT rate on energy bills over the next six months. This change comes after the VAT was previously reduced to 5% to mitigate the impact of inflation.
Switzerland
The Swiss government announced last year that its VAT rates would increase, which will also impact Liechtenstein's VAT regime. Effective from January 1, 2024, the standard, reduced, and special VAT rates in Switzerland have been increased as follows:
Standard rate: from 7.7% to 8.1%
Reduced rate: from 2.5% to 2.6%
Special rate (for accommodation): from 3.7% to 3.8%
United Kingdom
The zero rate for women's sanitary products has been extended to reusable period underwear, or "period pants," from January 1, 2024. From February 2024, the zero VAT rate for installing energy-efficient materials will now include more technologies, including water-source heat pumps. This zero rate will also apply to systems installed in buildings exclusively used for significant charitable activities.
