Why do just three EU countries hold 75% of all VAT rate exceptions?

A new European Commission report on EU VAT derogations uncovers striking disparities in how Member States apply special tax rates — and it’s raising tough questions about transparency and fairness across the single market.

Zentrale Erkenntnisse:

1. Luxembourg, Ireland, and Italy account for 75% of all 64 derogations currently in force.
2. The housing and construction sector dominates, making up nearly 30% of exceptions.
3. Super-reduced and parking rates make up over 90% of all derogations.
4. Cross-border adoption of these special rates remains low, despite EU reforms encouraging harmonisation.

With such uneven application, the report renews the debate over whether Europe’s VAT framework is truly fostering a level playing field ,or deepening fragmentation.

Read the full report via the Directorate-General for Taxation and Customs Union (DG TAXUD).