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VAT cuts as Europe inflation drops to 9.2% December 2022

December 2022 Eurozone energy inflation 26% (35% November); temporary VAT subsidies for domestic power, foods and other basics

A fast-growing queue of European countries are emerging to cut their already reduced VAT rates on domestic energy, petrol and foods. Eurozone headline inflation dropped back to 9.2% in December (10.1% in November 2022).

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This comes despite IMF criticising inflation VAT cuts in a recent report, and has been joined by the OECD review of VAT reductions and other policy remedies.

  • Italy rolls over again to March 2023 cut on gas VAT rate to 5%
  • Spain cuts food VAT with natural gas VAT from 21% to 5%
  • Lithuania cuts and rolls over various VAT cuts
  • Slovak Republic cuts VAT on restaurants and sports 2023
  • Estonia considers VAT cut to 5% for food and restaurants
  • Finland confirms VAT on electricity to 10% between December 2022 and April 2023; personal transport exempt for same period
  • Belgium makes energy cut to 6% permanent
  • Croatia to cut VAT on heating till April 2023
  • Ireland extends VAT cut on energy till end of Feb 2023
  • Greece extends reduced VAT rate cut for forth time
  • Luxembourg cuts VAT from 17% to 16% from 2023
  • Latvia parliament reviews foods and heating rate cut to 5% for 3 years
  • Portugal cuts domestic electricity from 13% to 6%
  • Germany renews VAT cut on hospitality services into 2023
  • Poland rolls over again energy and food temporary VAT cuts till 31 December 2022
  • UK Prime Minister rivals ponder energy VAT cut to 0%
  • Slovenia confirms domestic gas VAT rate cut and digital newspapers in September
  • Germany cuts gas VAT to 7% until March 2024
  • Bosnia approves VAT cut on basic foodstuffs
  • Italy considers food VAT rate cuts
  • Cyprus parliament votes to zero-rate VAT on petrol, energy and electricity
  • Bulgaria confirms energy VAT cut extension plus zero-rating basic foods
  • Netherlands plans to cut electricity VAT to 9% progress
  • Ireland to extend again VAT cut to restaurants, cafes and tourism on inflation worries
  • Estonia to temporarily cut VAT on domestic energy until May 2023
  • Ireland gas & electricity VAT cut to 9% for 6 months as inflation hits 40-year high
  • Portugal further duty cuts as wait confirmation on cut VAT on petrol to 13%
  • France Presidential candidates offer petrol and energy VAT cuts
  • Netherlands VAT cut on energy and duty reduction on petrol till Dec 2022
  • Spain has cut VAT on domestic fuel from 21% to 10% until 30 Jun 2022.
  • North Macedonia cuts VAT in basic foodstuffs (0%) and petrol (10%) from March 2022. Electricity rate cut till Jun 2023
  • Turkey to cut foodstuffs VAT from 8% to 1% and electricity to 8% as inflation escalates
  • Romania is reducing domestic electricity from 19% to 5% in 2022. It is also considering cutting foodstuffs VAT to 0%. A proposal to cut VAT on petrol is also being prepared for April 2022.
  • Greece is reviewing a VAT cut to electricity and basics
  • Czechia Ministry of Finance reduced to 0% VAT on domestic gas and electricity in breach of the VAT Directive and waived collections for Nov and Dec 2021. Full 21% rate now applies again in 2022.
  • Ukraine considering zero-rating from 20% of fuel in light of Russian invasion

The EU introduced new reduced EU VAT rate setting freedoms on 6th April 2022 which allows member states to use a reduced VAT rate below 5% for the first time on a controlled ranges of goods and services. Plus, extended the categories of supplies eligible for the other two reduced rates permitted below their standard rate. Energy VAT rates must however be at least 5%.

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