What products are subject to reduced or zero VAT rates? What VAT regions apply the most zero and reduced VAT rates? To answer these questions we queried our VAT Rules knowledgegraph. Our knowledgegraph extends a public product taxonomy that is used to classify goods for customs purposes (i.e. TARIC). It contains VAT rates, regions with special VAT treatment and product categories that are needed to differentiate different VAT rates. It does not consider services. For the analysis we only consider the root or top product classes that are not contained by any other product classes. The TARIC refers to these product classes as chapters.
The following plot shows the top 15 chapters with zero or reduced VAT rates. Most of the top categories are in food but also fertilizers and print products. It is not uncommon that more than 50% of product categories that are part of these chapters have reduced or zero vat rates.
The next plot shows the top countries with reduced or zero vat rates. To create the plot we take the average percentage of reductions for each chapter and region and take the average over regions. Top of the list are the Benelux countries followed by Northern Ireland (labelled GN_NOR_0) with 20% to 25% reductions or zero vat rates. Denmark is last because it does not apply reductions for products that are part of our knowledgegraph (i.e. no services).
In summary we see a lot of variation both across regions and categories. If you struggle to master this variation in you master data or apply the standard rate for all the countries and categories listed above and would like to increase your margins – we are happy to connect you to our knowledgegraph.
