EU VAT: EU extending the common system of VAT
The European Commission intends to conduct a further review of this subject and will not rule out further revisions to the legislation during the five-year extension period.
Currently, there is no maximum rate of VAT for EU member states, though notionally it has always been thought that 25% would be the upper limit based on the rates of the different member states. The new directive to continue with the minimum rate of 15% will be effective from January 1, 2011.
The rate of VAT in EU countries can vary across the spectrum. The UK's newly announced standard rate will be 20% from January. Sweden, Hungary and Denmark all have a standard rate of VAT of 25%. The lowest rates in the EU are in Cyprus and Luxembourg, where the rate is only 15%.