VAT Rates by Country 2026 — Complete Guide

Value Added Tax (VAT) is a consumption tax applied at each stage of the supply chain and passed on to the final consumer. It is the most widely used form of indirect tax in the world, used by over 170 countries. If you sell goods or services internationally — or even domestically once you cross a registration threshold — understanding VAT rates is essential for accurate invoicing and compliance.

This guide covers standard VAT rates, key reduced rates, and registration thresholds for 40+ countries, with notes on special cases relevant to freelancers and small businesses.

What Is VAT and How Does It Work on Invoices?

When you are VAT-registered, you must add VAT to your invoices (this is "output tax"). You can then reclaim VAT you paid on business purchases ("input tax"). The difference is what you pay to the government. If you are not registered, you neither charge nor reclaim VAT — but you also cannot include a VAT number on your invoices.

Your invoice must show: the VAT rate applied, the VAT amount, and your VAT registration number. Invoices that omit these details may be rejected by clients who want to reclaim input VAT.

EU VAT Rates 2026

All EU member states operate VAT at a minimum standard rate of 15%, with most applying rates between 19% and 27%. The EU sets a floor but allows each country to set higher rates and reduced rates for specific categories (food, books, medicine, etc.).

UK VAT (Post-Brexit)

The UK left the EU VAT area after Brexit. UK VAT rules are now set by HMRC independently.

UK VAT registration threshold: £90,000 annual turnover (2025/26 tax year). Below this threshold, registration is voluntary.

United States: Sales Tax

The US does not have a federal VAT. Instead, sales tax is levied at the state level (and sometimes at city/county level). Key differences from VAT:

• Sales tax is only charged to the final consumer — not between businesses (no input tax reclaim)
• Rates vary by state from 0% (Oregon, Montana, New Hampshire, Delaware, Alaska) to 9.55% (Tennessee, combined state + local)
• After the 2018 South Dakota v. Wayfair Supreme Court ruling, out-of-state sellers may need to collect sales tax if they exceed a state's economic nexus threshold (typically $100,000 revenue or 200 transactions per year in a state)

Common state sales tax rates: California 7.25%, Texas 6.25%, New York 4% (state) + local, Florida 6%, Illinois 6.25%.

UAE and Gulf Countries (GCC VAT)

The Gulf Cooperation Council introduced VAT in 2018. Saudi Arabia later raised its rate.

UAE invoices must include the supplier's TRN (Tax Registration Number), the date of supply, and a description of goods/services. For B2B transactions over AED 10,000, a tax invoice (not a simplified invoice) is mandatory.

Japan: Consumption Tax

Japan's consumption tax is 10% standard, with a reduced rate of 8% for food and beverages (excluding alcohol and dining out) and newspaper subscriptions. Japan introduced an invoice (qualified invoice) system in October 2023, requiring businesses to display their Qualified Invoice Issuer number (登録番号) on all invoices.

Registration threshold: JPY 10 million (approximately USD 65,000) in the two fiscal years before the current year.

India: GST

India replaced its previous tax system with the Goods and Services Tax (GST) in 2017. GST has four main slabs:

• 5% — essential goods, economy hotel stays
• 12% — processed foods, business class flights
• 18% — most services including IT, telecom, banking fees
• 28% — luxury goods, automobiles, tobacco

GST registration threshold: ₹20 lakh (~USD 2,400) for most states; ₹10 lakh for northeastern and hill states. B2B invoices must include the supplier's GSTIN, HSN/SAC codes, and the place of supply.

Australia and New Zealand: GST

Canada

Canada has a federal Goods and Services Tax (GST) of 5%, plus provincial taxes that vary by province. The combined rates are:

• HST (Harmonised Sales Tax): Ontario 13%, New Brunswick 15%, Nova Scotia 15%, Newfoundland 15%, PEI 15%
• GST + PST separately: British Columbia (5% + 7%), Saskatchewan (5% + 6%), Manitoba (5% + 7%)
• GST only: Alberta 5%, Yukon 5%, Northwest Territories 5%, Nunavut 5%
• GST + QST: Quebec 5% + 9.975% = 14.975%

Federal GST registration threshold: CAD 30,000 over four consecutive calendar quarters.

Brazil

Brazil has one of the most complex tax systems in the world. The main indirect taxes are ICMS (state, 7–25%), ISS (municipal, 2–5% on services), IPI (federal, 0–30% on manufactured goods), and PIS/COFINS (federal social contributions, combined ~9.25%). Brazil is undertaking a major tax reform to simplify this into a single CBS + IBS system expected to fully phase in by 2033.

How to Add VAT to Your Invoice

When using Invovate's invoice generator, enter your VAT rate in the "Tax" field. You can apply it globally (to all items) or per-line-item. The system calculates the VAT amount and displays it in the totals section. Make sure to also include your VAT/GST registration number in the notes or your company details section, as most jurisdictions require it to appear on the invoice.

Cross-Border VAT: Key Rules

If you sell to customers in other countries, the rules get more complex:

• B2B sales within the EU: Usually zero-rated if the buyer provides a valid VAT number (reverse charge applies). You must verify the buyer's VAT number via the EU VIES system.
• B2C sales within the EU: From July 2021, if your total EU cross-border B2C sales exceed €10,000, you must register for the EU One-Stop Shop (OSS) scheme and charge VAT at the buyer's country rate.
• Exports outside the EU: Generally zero-rated, but you must retain proof of export.
• Digital services: Subject to VAT in the customer's country in most jurisdictions, regardless of where the seller is based.

This guide covers the most common scenarios. For complex cross-border situations, consult a tax adviser familiar with international VAT law.