VAT (Value Added Tax) and its equivalent GST (Goods and Services Tax) are consumption taxes levied on most transactions in goods and services. Over 170 countries have a VAT or GST system. For individuals, VAT is embedded in the price of almost everything you buy. For businesses — especially digital service providers and e-commerce — understanding VAT rates, registration thresholds, and reverse-charge rules is essential.
This guide compares standard VAT/GST rates across major economies, reduced rates for essentials, registration thresholds, and key rules for digital businesses selling internationally in 2026.
| Country | Standard Rate | Reduced Rate(s) | Notes |
|---|---|---|---|
| Hungary | 27% | 5%, 18% | Highest in the world |
| Denmark | 25% | None | No reduced rate |
| Sweden | 25% | 12%, 6% | |
| Norway | 25% | 15%, 12% | Non-EU; own VAT system |
| Finland | 25.5% | 14%, 10% | Increased 2024 |
| Iceland | 24% | 11% | |
| Austria | 20% | 13%, 10% | |
| France | 20% | 10%, 5.5%, 2.1% | Multiple reduced bands |
| Germany | 19% | 7% | Two-rate system |
| Italy | 22% | 10%, 5%, 4% | |
| Spain | 21% | 10%, 4% | |
| Netherlands | 21% | 9% | |
| Belgium | 21% | 12%, 6% | |
| Portugal | 23% | 13%, 6% | |
| Ireland | 23% | 13.5%, 9%, 4.8% | Multiple bands |
| United Kingdom | 20% | 5%, 0% | Zero-rate for food, children's clothing |
| Switzerland | 8.1% | 3.8%, 2.6% | Non-EU; lower rates |
| Australia | 10% | 0% (fresh food, medical) | GST; major exemptions |
| New Zealand | 15% | None (broad base) | Very few exemptions |
| Canada | 5% (GST) | HST 13–15% in most provinces | Provincial HST combined |
| Japan | 10% | 8% (food, non-alcoholic) | |
| South Korea | 10% | Zero for some | |
| Singapore | 9% | 0% (exported, financial) | Increased from 8% in 2024 |
| India | 18% (standard) | 5%, 12%, 28% | GST; 4-tier structure |
| China | 13% | 9%, 6% | VAT on goods/services |
| Brazil | 17–20% | Various | State ICMS varies by state |
| USA | — | — | No federal VAT; state sales tax only |
| UAE | 5% | 0% | Introduced 2018; low rate |
| Saudi Arabia | 15% | 0% | Tripled from 5% in 2020 |
| Qatar, Kuwait, Bahrain | 0% / Pending | — | VAT not yet fully implemented |
Most countries allow small businesses to operate below a registration threshold without charging VAT. Key thresholds for 2024/2025:
Important for digital businesses: The EU's One-Stop-Shop (OSS) mechanism allows non-EU businesses selling digital services to EU consumers to register once (in any EU country) and remit VAT for all EU sales through one return. Previously, registration in each EU member state was required.
The United States is the only major developed economy without a federal VAT or GST. Instead, the US uses:
The difference between a sales tax and VAT: a sales tax is only collected at the final retail stage; a VAT is collected at each stage of production (but with input tax credits, so the economic burden is the same at the end consumer). The US has periodically considered a federal VAT but faces political resistance. Most US states have now implemented economic nexus rules for sales tax on online sales — since South Dakota v. Wayfair (2018), businesses can be required to collect sales tax in states where they have significant sales, even without physical presence.
The taxation of digital services (SaaS, streaming, e-books, online courses) has changed dramatically since 2015. Key rules:
For global SaaS businesses: operating in the EU, UK, Australia, Canada, and New Zealand simultaneously requires managing VAT/GST obligations in each jurisdiction. Tax compliance tools (Stripe Tax, Avalara, TaxJar) automate much of this calculation.
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