EU VAT Guide for 2026: How VAT Works Across the European Union
VAT is harmonised across the EU but rates differ by member state (standard rates run 17%–27%). This guide explains the common VAT system, OSS/IOSS, distance-selling thresholds, and cross-border compliance.
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Key Takeaways
The EU does not set one VAT rate — each member state sets its own standard rate, ranging from 17% in Luxembourg to 27% in Hungary, plus its own reduced rates. What's harmonised across the bloc is the cross-border framework: place-of-supply rules, the EUR 10,000 EU-wide distance-selling threshold, and the One Stop Shop (OSS), which lets a seller register once instead of in every member state above that threshold. All electronically supplied services — SaaS, streaming, e-books, and software — are taxable everywhere in the EU and covered by OSS for B2C sales; intra-EU B2B supplies are generally zero-rated under the reverse charge.
Taxability Snapshot
SaaS
Taxable (EU-wide)
Digital Goods
Taxable (EU-wide)
Sales Tax Rates
The EU does not have one VAT rate. Each member state sets its own standard rate, currently from 17% in Luxembourg to 27% in Hungary, plus its own reduced rates. What is harmonised is the cross-border framework: the place-of-supply rules, the €10,000 distance-selling threshold, and the One Stop Shop.
Element | Rule |
|---|---|
Standard rates | 17%–27%, set per member state |
Distance-selling threshold | €10,000 EU-wide (B2C goods + digital) |
OSS | One quarterly return for all EU B2C |
IOSS | Imports of goods ≤€150 from outside the EU |
For country specifics, see the individual guides under our Europe VAT guides.
The VAT in the Digital Age (ViDA) reforms, adopted in March 2025, phase in through 2035: minor OSS and IOSS improvements from January 2027; Single VAT Registration (expanded OSS and reverse charge) plus the first platform deemed-supplier rules from July 2028 (mandatory January 2030); and mandatory e-invoicing and digital reporting for intra-EU B2B from July 2030, with existing national real-time reporting systems required to align with the EU standard by 2035.
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Germany · MwStRates as of September 2026. Source: BMJ: UStG section 12 (opens in a new tab); BMF: Tax changes 2026 (opens in a new tab).
Germany · Standard rate
19%
MwSt rate
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This is an estimate. Whether a sale is taxable, and at which rate, depends on what you sell, who you sell to and where it's supplied. If you intend to rely on these rates, please use the Kintsugi platform.
Registration & nexus threshold
The EU uses VAT registration rules rather than US-style economic nexus. For cross-border B2C sales, VAT is due in the seller's own country until total EU distance sales pass the EU-wide EUR 10,000 threshold, after which it is due in the customer's country [2]. Above that threshold a seller can register once for the One Stop Shop instead of registering in every member state; a non-established business supplying a single country registers there directly [2]. Registration steps are in the How to Register section.
Filing frequency & deadlines
OSS returns are filed quarterly, due the end of the month following each calendar quarter, with a single payment that your member state of identification distributes to every country where you made sales.
Exemptions
Reduced and zero rates vary by member state, but intra-EU B2B supplies are generally zero-rated under the reverse charge and exports outside the EU are zero-rated. All electronically supplied services — SaaS, streaming, e-books, and software — are taxable and covered by OSS for B2C sales.
Penalties
Penalties for OSS errors or late returns are set by your member state of identification. Persistent non-compliance can lead to exclusion from OSS and a requirement to register for VAT separately in each member state where you sell.
Sources
[1] European Commission — VAT rates and the VAT Directive (2006/112/EC)
[2] European Commission — One Stop Shop and Import One Stop Shop (EU-wide EUR 10,000 threshold)
Verified July 2026 against European Commission guidance.
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