Top 7 countries with highest VAT rates in 2025- Hungary tops the list at 27% and how India compares

The highest Value Added Taxes collected is from Hungary, which is at a standard of 27 per cent. There are reduced VAT rates of 18 per cent, which are applicable to certain products like milk, certain dairy products, cereal, flour and starch and services like musical and dancing events.

Finland raised its VAT to 25.5 per cent on 1 September 2024; there are two reduced rates of 14 per cent and 10 per cent for products like books, newspapers, journals or magazines, hotel services, public transport, pharmaceuticals, entrance to cultural & sporting events, film screenings, royalties for television and public radio activities.

Sweden has a standard VAT rate of 24 per cent. Reduced rates of 12 per cent, 6 per cent and 0 per cent are also available in Sweden for some household products. Denmark, Norway, Croatia, and the Faroe Islands also have a standard VAT rate of 24 per cent.

Greece has a standard VAT rate of 24 per cent. A reduced rate of 13 per cent is applicable in hospitality, hotel accommodation, some food items, passenger transport, entrance to cinema and sports events, tour packages, gyms, cinema, theatre, health supplies, 6 per cent on public gas and electricity, newspapers and journals. A 24 per cent VAT rate is also applicable to Iceland.

Poland has a VAT rate of 23 per cent. With a reduced slab of 8 per cent and 3 per cent. Portugal and Ireland also have similar VAT rates with a reduced slab of 8 per cent, 5 per cent and 13.9 per cent and 6 per cent.

Italy has a VAT rate also known as Imposta sul Valore Aggiunto (IVA) of 22 per cent. There are also two reduced rates of 10 per cent and 5 per cent, and a super reduced rate of 4 per cent. Uruguay, Slovenia, and Estonia also levy a 22 per cent standard VAT rate.

The standard rate of 21 per cent is applied for regular supplies of goods and services. Super reduced rate of 4% for basic necessities and reduced rate of 10 per cent for necessities that are not included in the basic necessities. A 21 per cent standard VAT rate is levied in Argentina, the Netherlands, Latvia, Montenegro, Belgium, the Czech Republic, and Lithuania.

India has a standard VAT, also known as GST (Goods and Services Tax), of 18 per cent. In India, there are other slabs, such as a 5 per cent reduced rate and a 40 per cent sin tax for luxury items. While there is a 40 per cent luxury tax, India’s rates are relatively moderate by international standards, especially in countries like Hungary, Finland. It is somewhere greater than countries like the US and China, which levy 15.5 per cent and 13 per cent, respectively.