VAT Tax by Country 2025
VAT = value-added tax
The VAT tax by country rate is not always called the VAT tax and can sometimes be called the goods and services tax. This is a tax that is called a value-added tax that is levied on goods and services to the people of the country. It covers different elements and components of every stage of the development, manufacturing and production, and the distribution of goods and services to the customers of the country within.
In a nutshell, when the customer collects and gives money for a product, the cost of the purchase is going to be a little bit higher than the cost of the product. In most cases across the world, there is the cost of the product, plus a sales tax, and the VAT is added to that. There may be additional taxes on the good or service depending on the industry, such as a hotel tax or resort tax or mandatory gratuity in some locations.
VAT costs are similar to sales tax. In some countries they will replace it, and in others they will be added to the cost of the goods or service. Some countries also provide relief for goods and services taxes to their tax paying citizens.
Countries With High VAT Taxes
The countries in Europe are considered to have the highest VATs in the world.
- Hungary: 27%
- Croatia, Denmark, Sweden: 25%
- Cyprus, Germany, Romania: 19%
- Malta: 18%
- Luxembourg: 17%
The average VAT in Europe is 21 percent which is approximately 6 percentage points higher than international averages.
Other countries do not have a VAT at all, such as the United States. A factor influencing this is the economy. The country provides for their consumers to pay sales tax only, and provides relief to businesses that need boosts for production and distribution of goods and services. Additionally the United States provides for businesses in specific industries to levy their own goods and services taxes, such as in the hotel industry.
Countries like Canada do have a VAT, and it is called the Goods and Services Tax, or GST. The rate of the GST is legislated by the province, but is typically 5 percent across the country. Ontario is the province with the highest GST rate, a6t 13 percent. However, Canadians that file taxes annually will see relief and receive quarterly checks to pay for their GST costs.
