Changes to VAT Rates – Government Proposal
At the beginning of 2025, the government proposes changes to VAT rates, where the current 10% rate would mostly shift to 14%, and the VAT rate for certain product groups would decrease from 25.5% to 14%. Additionally, the VAT on sweets would be increased to 25.5% in June 2025.
Exceptions:
Newspapers, magazines, and public broadcasting would remain under the 10% VAT rate.
The determining factors for the VAT rate are the delivery or performance date.
The 14% VAT rate would apply to, for example:
- Books
- Medicines
- Sports and cultural services
- Accommodation services
- Menstrual and incontinence products (reduced from 25.5%)
- Children’s diapers (reduced from 25.5%)
VAT for Small Businesses
From the beginning of 2025, there will be changes to the VAT for small businesses. These changes apply to all small businesses regardless of their form.
The most significant tax changes for small businesses at the turn of the year are:
- Removal of the lower limit relief: it will be possible to apply for the lower limit relief for the last time for the year 2024.
- The threshold for minor business activity will increase from the current €15,000 to €20,000.
Additionally, small businesses can benefit from the VAT exemption for minor activities in another EU member state from 1 January 2025. The aim is to reduce the administrative burden on small businesses, promote international trade, and create equal operating conditions within the EU.
Our experts can assist with tax-related questions and ensure that the VAT rate changes are correctly accounted for in your business.
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