Malta VAT rate third lowest in the EU

Dr. Trudy Marie Attard | Published on 13 Feb 2012

Chetcuti Cauchi

In a report indicating the applicable VAT rates throughout the EU as at 1st January 2012, the European Commission illustrated that Malta enjoys a VAT rate at almost three percentage points below the average which stands at 20.9 per cent. Malta’s VAT rate is the third lowest in the EU, with only Cyprus and Luxembourg enjoying a lower rate, 15%, the lowest standard VAT rate allowed within the EU.

Due to the ongoing financial crisis, many member states have revised their VAT rates upwards over the past two years.  Fourteen member states raised the standard rate by at least a notch, and even by two percentage points in Ireland and Hungary. The EU Treaty does not permit the harmonisation of VAT rates across the EU as this is at the sole competence of the individual member states.

Malta, Ireland and the UK are the only EU member states that still do not charge tax on foodstuffs and pharmaceuticals. This concession had been given to Ireland and the UK years ago and was successfully negotiated by Malta prior to its accession to the EU in 2004. Malta has always maintained that it would stick to its accession commitments as long as Ireland and the UK retained the same system.


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