European Countries with the Highest and Lowest VAT Rates
For instance, you can expect a higher VAT refund in Hungary because the country currently has the highest VAT rate in Europe with a standard rate of 27%4. Conversely, Luxembourg has the lowest standard VAT rate, which is at 17%5. So, you might see a smaller VAT refund percentage in Luxembourg.
Refund Percentage While the standard VAT rate in Italy is 22%, you won't get the entire 22% back as a refund. A percentage of the VAT paid, typically ranging from 11% to 15.5% of the purchase amount, will be refunded after deducting administrative fees and the fees charged by the tax refund company you use.
Luxembourg has currently the lowest VAT rate with a VAT rate of 17%. Each EU member state decides on the percentage of VAT (Value added tax) tax on the of goods and services. This tax is meant to be applied on the added value that the specific business adds to the service or goods.
How much VAT is refunded in France? Although the standard VAT rate is 20%, tourists cannot get a full refund of 20% on their purchases. Only some of the VAT can be claimed back, around 12%.
The Spanish government has removed the minimum amount of €90.16 that previously applied to Tax Free Shopping transactions made in the country. This means that, whatever the value of the goods you purchase, you now have the right to claim back the VAT. The new regulations came into effect in July 2018.
Registering for VAT in Portugal
For businesses based in Portugal, the VAT registration threshold is €13,500. This is part of a phased increase, with the threshold rising to €14,500 in 2024 and €15,000 in 2025. The distance-selling threshold in Portugal is €10,000.
France: 20% Italy: 22% Spain: 21% Luxembourg: 17% (the lowest in the EU)
Top 10 European Tax Havens
At the time of purchase, the retailer will give you an VAT refund form, which must be signed by both the retailer and you. Obtain a tax-free form from the store, known as Formulaire de Détaxe, and have it stamped by customs before leaving the EU.
The “Flat Tax at 7%” measure covers pensioners living abroad who move to central Italy. This measure targets people who have been resident abroad for at least five years and receive pension income from a foreign entity.
VAT Rate in Greece
As a non-EU resident, you can receive a VAT refund of approximately 12.5% to 14.75% on products subject to this standard rate.
The old regime provided that 70% of qualifying income from employment carried out in Italy is exempt from income tax. So only 30% of gross salary/net profit is liable to income tax. 100% of salary continues to be liable to social security under normal rules.
These are the top ten countries for VAT refunds, along with what to expect when shopping, completing paperwork, and claiming your tax back.
Among European OECD countries, the average statutory top personal income tax rate lies at 42.8 percent in 2025. Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) have the highest top rates. Hungary (15 percent), Estonia (22 percent), and the Czech Republic (23 percent) have the lowest top rates.
In Germany the amount paid for merchandise includes 19 % value added tax (VAT). The VAT can be refunded if the merchandise is purchased and exported by a customer whose residence is outside the European Union.
Malta. Malta has become a mainstay in conversations about the best countries in Europe for taxes. Whether you're a non-resident or full-time permanent resident living in Malta year-round, you'll benefit from tax deductions on foreign-earned income.
The European Union list of non-cooperative jurisdictions for tax purposes (EU blacklist) was first published in 2017 as a response to tax avoidance in the EU and beyond. At the time, 92 non-EU countries were screened for compliance with tax transparency, fair tax competition and anti-profit shifting regulations.
Countries with no income tax include Anguilla, Bahamas, Bahrain, Bermuda, British Virgin Islands, Brunei, Cayman Islands, Kuwait, Maldives, Monaco, Oman, Qatar, Saint Kitts and Nevis, Turks and Caicos, United Arab Emirates and Vanuatu. Tax-free countries in Europe include Monaco, Liechtenstein, Cyprus, and San Marino.
When compared to the standard VAT rates of other countries within Europe, the countries where you pay the lowest VAT rates are Switzerland, Luxembourg and Turkey. For this reason, the VAT rate for your purchases from these countries will be low. This will mean a reduction in the VAT fees you receive back.
For international residents, a realistic monthly budget in 2026 is roughly: Single person: around €1,600–€2,300 per month in a mid‑sized city, and €2,000–€2,700 per month in the more expensive cities.
Step-by-step guide : how to get a VAT refund in France
Did you know that if you reside outside the European Union you are entitled to a refund of the VAT (Value Added Tax) paid on your purchases?
Common mistakes—such as failing to register in the correct countries, applying the wrong VAT rates, or missing important filing deadlines—can lead to serious financial and legal consequences.
How To Determine Your Residency Status in Portugal. You're generally considered a Portuguese tax resident if you: Spend 183 days or more in Portugal during any 12-month period starting or ending in the relevant tax year, or. Maintain a habitual residence in Portugal on December 31, even if you stay fewer than 183 days.