EU VAT Guide for 2026: How VAT Works Across the European Union
VAT is harmonized 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 harmonized 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 harmonized 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.
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.
Frequently asked questions
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