VAT Exemption Thresholds in Europe

Countries around the world have been introducing various fiscal measures to counteract the economic distress caused by COVID-19. One measure—among many others—has been to make changes to Value-Added TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es (VAT), such as delaying payments, speeding up refunds, or reducing rates. These measures can provide great relief for many businesses and in some cases for consumers as well.

However, it is important to keep in mind that—mainly to reduce compliance and administrative costs—most countries have VAT exemption thresholds: If a business is below a certain annual revenue threshold, it is not required to participate in the VAT system. This means that such small businesses—unlike businesses above that threshold—do not collect VAT on their outputs sold to customers but also cannot receive a refund for VAT they paid on business inputs.

Due to such VAT exemption thresholds, many small businesses will not be able to benefit from the VAT changes that are being introduced to provide relief during this crisis. For example, VAT payment extensions and interest-free late payments—such as discussed or implemented in Austria, Estonia, and the Netherlands—won’t provide relief for businesses that are below the threshold.

The following map looks at VAT exemption thresholds in European OECD countries.

The United Kingdom has the highest VAT exemption threshold, at €96,840 (US $108,412). Switzerland and France follow, at €89,900 ($100,643) and €82,800 ($92,695). Spain and Turkey are the only two countries that do not have a threshold, meaning that all businesses are in the VAT system.

VAT Exemption Thresholds, as of January 2019

Annual Revenue Threshold below which VAT Collection Is Not Mandatory
Country	National Currency	Euros	US-Dollars
Austria (AT)	EUR 30,000	€ 30,000	$ 33,585
Belgium (BE)	EUR 25,000	€ 25,000	$ 27,988
Czech Republic (CZ)	CZK 1,000,000	€ 38,960	$ 43,616
Denmark (DK)	DKK 50,000	€ 6,700	$ 7,501
Estonia (EE)	EUR 40,000	€ 40,000	$ 44,780
Finland (FI)	EUR 10,000	€ 10,000	$ 11,195
France (FR)	EUR 82,800	€ 82,800	$ 92,695
Germany (DE)	EUR 17,500	€ 17,500	$ 19,591
Greece (GR)	EUR 10,000	€ 10,000	$ 11,195
Hungary (HU)	HUF 8,000,000	€ 24,600	$ 27,540
Iceland (IS)	ISK 2,000,000	€ 14,570	$ 16,311
Ireland (IE)	EUR 75,000	€ 75,000	$ 83,963
Italy (IT)	EUR 65,000	€ 65,000	$ 72,768
Latvia (LV)	EUR 40,000	€ 40,000	$ 44,780
Lithuania (LT)	EUR 45,000	€ 45,000	$ 50,378
Luxembourg (LU)	EUR 30,000	€ 30,000	$ 33,585
Netherlands (NL)*	EUR 1,345	€ 1,345	$ 1,506
Norway (NO)	NOK 50,000	€ 5,070	$ 5,676
Poland (PL)	PLN 200,000	€ 46,980	$ 52,594
Portugal (PT)	EUR 10,000	€ 10,000	$ 11,195
Slovak Republic (SK)	EUR 49,790	€ 49,790	$ 55,740
Slovenia (SI)	EUR 50,000	€ 50,000	$ 55,975
Spain (ES)	None	None	None
Sweden (SE)	SEK 30,000	€ 2,870	$ 3,213
Switzerland (CH)	CHF 100,000	€ 89,900	$ 100,643
Turkey (TR)	None	None	None
United Kingdom (GB)	GBP 85,000	€ 96,840	$ 108,412
Source: OECD, Under Taxes on Consumption, “VAT/GST: Registration/Collection Thresholds (2019),” http://www.oecd.org/tax/tax-policy/tax-database/. Notes: Except the Netherlands, all countries covered allow businesses below the threshold to register and account voluntarily for VAT. This gives small businesses the option to avoid the disadvantages of non-registration but also increases their compliance and administrative costs. Thresholds in countries that have a national currency other than the Euro were converted to Euros using 2019 exchange rates. The conversion to U.S. dollars is also based on 2019 exchange rates. *In the Netherlands, the basis for calculating the VAT exemption threshold is not the annual revenue but the net annual VAT due.

An overview of VAT relief and other fiscal measures that countries around the world have implemented during the coronavirus outbreak can be found here.

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