Malta Has 3rd Lowest VAT Rate Among 27 EU Members


CSB Group has recently learnt that Malta has the third lowest VAT rate among the EU’s 27 members. This is according to the latest data published in Brussels, as reported by The Times of Malta.

A document released by the European Commission gave details of the new applicable VAT rates as from the start of this year across the bloc. This document showed that, at 18 per cent, Malta still enjoys one of the lowest rates in the EU, almost three percentage points below the average, which stands at 20.9 per cent.

Many member states had to revise their VAT rates upwards in the past couple of years due to the ongoing financial crisis. 14 out of the 27 members have in fact raised the standard rate by at least a notch. In places like in Ireland and Hungary, this has been even been raised by two percentage points.

Only Cyprus and Luxembourg have a lower VAT rate than Malta, according to The Commission. The overwhelming majority of member states have tax consumption at higher rates with Sweden, Denmark and Hungary topping the list.

The only EU member states that still charge no tax on foodstuffs and pharmaceutical are Malta, Ireland and the UK.

This concession had been given to Ireland and the UK many years ago and was successfully negotiated by Malta prior to its accession to the EU in 2004.

In a Green Paper by the Commission last year, it was clearly stated that zero rates, like the ones enjoyed by Malta, should be abolished to lower the risk of distorting competition in the EU. Malta has always maintained that it would stick to its accession commitments – as long as Ireland and the UK retained the same system.

The EU Treaty does not allow any harmonisation of VAT rates across the EU because this is the sole competence of individual member states. The lowest standard VAT rate allowed in the EU remains 15 per cent.