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Common standard rates: UK 20%, Germany 19%, France 20%, Ireland 23%, Italy 22%, Spain 21%, Netherlands 21%, Australia 10% (called GST), Singapore 9% (2024), Canada 5% (GST). Some countries have reduced rates (5% or 0%) for essentials like food, books, and children's clothing. Hungary has the highest standard rate at 27%.

VAT is charged at each stage of production (businesses reclaim VAT on inputs, remitting only the net difference), while sales tax is charged only at the final retail sale to the consumer. VAT is used in most of the world; the U.S. uses state-level sales tax. The consumer pays roughly the same final amount either way, but VAT creates an audit trail at every transaction.

Goods and Services Tax (GST) is functionally identical to VAT — it is just the term used in Australia, Canada, India, Singapore, and New Zealand. The math is the same: a percentage added to the net price, with businesses claiming input credits. India's GST is more complex due to its multi-tier structure (CGST, SGST, IGST).

Intra-EU B2B supplies of goods between VAT-registered businesses are zero-rated (0% VAT) when a valid VAT number is provided. The buyer accounts for the VAT via reverse charge. Services follow similar but slightly more complex rules depending on the type of service and the customer's location.

If you are VAT-registered, you can generally reclaim VAT paid on business expenses (input tax), offsetting it against VAT collected on sales (output tax). Some expenses — like business entertainment, certain vehicles, and VAT on goods used for both business and private purposes — have restrictions or require partial recovery calculations.

Under reverse charge, the recipient of a service (not the supplier) accounts for the VAT. This is common in cross-border B2B services within the EU. The recipient both reports output VAT and reclaims input VAT on the same transaction — net zero cash impact, but it must be recorded on the VAT return to maintain an audit trail.