New year – new rates of the VAT in the European countries

13.01.2012 In the beginning of the new year a number of the most popular countries among the Russian investors has decided to reconsider Tax laws and to increase the rate of the VAT.

Since the 1st of January 2012 Hungary has raised the standard rate of the VAT from 25 % to 27 %. Thus, Hungary became the first country which has exceeded 25 % threshold and is the owner of the highest rate of the VAT in Europe. Together with Hungary since the 1st of January 2012 Ireland has increased the VAT rate  from 21 % to 23 %.

Also, Cyprus, France and the Czech republic have declared intention beginning from the 1st of March 2012 to make following changes of the rate of the VAT:
- Cyprus is going to increase the standard rate of the VAT from 15 % to 17 %.
- The Czech republic has lifted the lowered rate of the VAT from 10 % to 14 %.
- France also has lifted the lowered rate of the VAT from 5,5 % to 7 %.

In the wake of its neighbors, since July, 2012 Poland plans to increase the rate of the VAT to 24 %. The Czech republic prepares introduction of the uniform rate of the VAT of 17,5 %. Since September 2012, Italy will lift the rate of the VAT to 23 %.

Expert’s opinion

“The increase of the rate of VAT in Europe will be notable not only for businessmen, but also for simple citizens of those countries where increase of VAT rate is planned. Everything becomes more expensive, including journey, residing, food, hotel and restaurant business. Nevertheless, consciously going on such step, the Governments of the countries solve at the expense of additional receipts in the budget or to reduce a state debt (for example, Czechia) or to create stationary economy and to avoid a default in case of unforeseen crisis.

It is necessary to notice that the increase passes in those countries which last year had problems in economy and were in crisis. It is necessary for this reason  more carefully make our decision when we choice any jurisdiction for business”.

On the basis: http://www.intax-info.com/

Irina Lomakina ( Director of Moscow office “Honest and Bright Ltd”)