A VAT is a "value added tax" used in many countries and throughout the European Union that is placed on consumer goods. The VAT on wine varies by country and in the European Union, it ranges between 12 percent and 25 percent.
Significance
The rate of VAT on wines applies to all wines, both still and sparkling wine between 5 percent and 15 percent alcohol content. The highest VAT placed on wine is 25 percent in Sweden, Hungary and Denmark, while the lowest VAT of 12 percent occurs in Portugal.
Considerations
Many other countries use a VAT that is set at a certain rate regardless of the type of product being purchased. In Mexico, the VAT is set at 15 percent in most areas of the country and at 10 percent in towns that border other counties. In India, the standard VAT is 20 percent, but wine has an additional 5 percent VAT added to it.
Exceptions
In many countries, including all countries in the European Union, if wine is purchased in a non-VAT country and brought into a VAT country, the tax does not have to be paid. This exception only applies to wine in amounts considered appropriate for personal consumption, which is up to 90 liters of wine in the European Union.
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