The vocabulary of the VAT Rates API

A consumption tax levied on goods and services at each stage of production and distribution in the EU.

VAT is collected by businesses from their customers and remitted to tax authorities. Businesses can deduct VAT paid on business purchases (input VAT) from VAT collected (output VAT). The end consumer bears the full tax. VAT rates vary by country and product category.

ExampleA product costs €100 net. In Germany (19% VAT), the customer pays €119, and the business remits €19 to tax authorities.

The default VAT rate applied to most goods and services in an EU country.

EU rules require a minimum standard rate of 15%. Most countries set rates between 19-25%. Germany uses 19%, France 20%, Sweden 25%. The standard rate applies unless a specific reduced rate category applies.

ExampleGermany's standard VAT rate is 19%, applied to most products including electronics, clothing, and services.

A lower VAT rate applied to specific categories of goods and services deemed essential or socially important.

EU countries may apply one or two reduced rates (minimum 5%) to items like food, books, newspapers, medicine, and public transport. Germany's reduced rate is 7%, France has 5.5% and 10%. Super-reduced rates below 5% exist in some countries for specific items.

ExampleBooks in Germany are taxed at the reduced rate of 7% instead of the standard 19%.

A 0% VAT rate that still allows businesses to recover input VAT, different from exemption.

Zero-rated goods have no VAT charged but the transaction is still "taxable" for VAT purposes, meaning sellers can still recover VAT paid on related purchases. This differs from exemption, where no input VAT recovery is possible. Common for exports and certain necessities.

ExampleExports from the EU to non-EU countries are zero-rated—no VAT charged, but the exporter can still reclaim VAT on materials.

A mechanism where the buyer rather than the seller accounts for VAT, used in B2B transactions.

In reverse charge transactions, the seller invoices without VAT, and the buyer self-accounts for VAT on their own return. This simplifies cross-border B2B trade within the EU by avoiding the need for sellers to register in every customer's country.

ExampleA German company buys services from a French company. The French invoice shows €0 VAT with "Reverse charge." The German company reports both input and output VAT on its return.

A simplified VAT registration scheme allowing one EU registration for all B2C sales across the EU.

OSS lets businesses register in one EU country and report all EU B2C sales through that registration. It covers digital services, distance sales of goods, and certain other services. Quarterly returns break down sales by destination country. Replaced the older MOSS scheme in 2021.

ExampleA Dutch e-commerce company uses OSS to report sales to customers in all 27 EU countries through their Dutch VAT registration.

The predecessor to OSS, covering only digital services sold to EU consumers.

MOSS was introduced in 2015 for digital services (telecommunications, broadcasting, electronic services). It allowed single registration for reporting these sales across the EU. In 2021, MOSS was expanded and renamed OSS, covering additional service types and goods.

ExampleBefore OSS, a software company used MOSS to report digital service sales to EU consumers through one registration.

Official registration with tax authorities allowing a business to charge and reclaim VAT.

Businesses exceeding country-specific thresholds must register for VAT. Registration provides a VAT identification number, required on invoices and for B2B verification. Without OSS, businesses might need registrations in multiple EU countries where they have customers or stock.

ExampleA UK company selling €15,000 to German consumers must register for German VAT (or use OSS) as it exceeds the €10,000 EU-wide threshold.

A unique identifier assigned to VAT-registered businesses, used for B2B transactions.

VAT numbers follow country-specific formats (e.g., DE123456789 for Germany, FR12345678901 for France). They must appear on invoices and are validated for B2B reverse charge transactions. The VIES system allows verification of EU VAT numbers.

ExampleA valid German VAT number: DE123456789. Verify it on the EU VIES portal before applying reverse charge.

Electronically supplied services including software, streaming, e-books, and online services.

For VAT purposes, digital services are taxed where the customer is located. This includes: website hosting, software downloads and SaaS, music/video streaming, e-books, online gaming, and cloud services. Physical goods shipped to customers follow different rules.

ExampleA streaming service charging €9.99/month must apply German VAT (19%) to German subscribers and French VAT (20%) to French subscribers.