The July edition of our International VAT Rate Round Up highlights the latest updates from Cyprus, Ecuador, Finland, Lithuania, and the Netherlands.
Cyprus
The Tax Authorities announced a further extension to the zero rate of value-added tax (VAT) on essential goods until 30 September 2024.
These measures were originally introduced to assist consumers and also to reduce the financial burden on consumers.
These measures have been in effect since 5 May 2023 with further additions and extensions in November and December 2023.
The Tax Authorities confirmed that the categories remaining eligible for the zero VAT rate are:
- Bread and milk (including sweetened, condensed, long-life, flavoured and vegetable milk);
- Eggs;
- Baby food;
- Infant diapers, adult diapers, feminine hygiene products;
- Coffee; and
- Vegetables (fresh or chilled).
Ecuador
In Bulletin No. 040 from 8 May 2024, the Ministry of Tourism announced a reduction of the general VAT rate to 8% for the provision of all tourist services during the holiday of the Battle of Pichinchaon on 24-26 May 2024.
The activities defined as tourist services for which the VAT rate reduction applies are:
- Accommodation;
- Food and beverage service;
- Transportation, when it is mainly dedicated to tourism, including air, sea, river, land and vehicle rental for this purpose;
- Operation, when travel agencies provide their own transportation;
- The intermediation, tourist services agency and event organizers, congresses and conventions; and
- Casinos, game rooms (bingo-mechanical), racetracks and stable amusement parks.
Finland
Finland is to implement Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/85 as regards rates of value added tax.
In a proposal VM/2024/51 from 18 April, amending the VAT Act, the Finnish Government is expanding the scope of the 10% reduced VAT rate to virtually held events such as sports, culture, and entertainment.
The place of supply for these events would be the place where the purchaser is established.
The Act is intended to enter into force on 1 January 2025.
Lithuania
On 4 June 2024, the Seimas of the Republic of Lithuania rejected Bill (Reg. Nr. XIVP-3658) proposing amendments in the VAT Law, Art. 19, Paragraph 3, Clause 6 – catering services and takeaway meals provided by restaurants, cafes, and similar catering establishments to be temporary placed to 9% reduced VAT rate.
For the time being the applicable VAT rate for these services remains 21%.
Netherlands
In the Budgetary appendix outline agreement published on Kabinetsformatie website, the new Dutch government plans VAT increases from 2026 for:
- accommodation services; and
- cultural events such as concerts, museums, theatre performances, and visits to events and attractions
Currently, the above are taxed at the reduced 9% VAT rate.
From January 2026, the above are expected to be on the standard VAT rate for the Netherlands of 21%.
International VAT Rate Round Up: June 2024
If you missed out on our June VAT rate announcements of VAT threshold changes, you can catch up now.
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