VAT application in toys around Europe | Key4Communications |

Although toys and games are being seen as a fundamental tool through which children play and exercise their right to play recorded by the Universal Declaration of the Rights of the Child, and although toys and games are considered a first necessity good for children during Christmas, in most European countries toys and games are taxed with the same Value Added Tax (VAT) rate as luxury goods.

Europe, far from considering the toy as a necessary tool, and consequently applying a reduced VAT rate -as it applies to cultural goods such as books or newspapers – applies a standard VAT rate to it, which in most states is over 20%, reaching a peak of 25% in the Nordic countries such as Denmark, Norway or Sweden.
Also, many of the European countries have recently increased VAT rate applied to toys -and the rest of items- in an effort to address some government’s deficits.

Despite this situation, toy actors do not consider that VAT rate rises have exercised a negative effect on toy sales and, in most European states -with the exception of the Mediterranean countries-, nor traders or manufacturers demand a VAT reduction.
However, in Spain and in Italy the toy sector claims for a VAT reduction, and wants the toy to be considered a cultural good –which is taxed at a super-reduced VAT rate of 4%-, stating that a price reduction will boost toy sales.

United Kingdom:

Toys are taxed at the standard VAT rate, which is 20%. The last increase was recorded in January 2011, when the standard VAT rate increased from 17.5% to 20%. The British Toy Retailers Association says that the sector has no specific claim to VAT relating to toys: “Everybody would prefer and welcome a reduction in VAT, but this is hard to see as being likely to happen”. And adds that “any increase in prices is unwelcome and will have an effect on a consumer’s disposable income in general terms”.

France:

In this country, toys are taxed at the standard rate of VAT, which is 19.6%. The last VAT rate change came into force in January 2000, when the standard rate was reduced a point. However, in 2014 is expected a increase of the VAT standard rate to a 20%. Although France has been a country that has experienced several VAT rates rises in the last half century, the country's toy industry has no claim on this tax, and there has been no negative effect VAT rise registered on industry sales.

Spain:

Since September 2012, when it went into effect last VAT hike, toys are taxed at a 21% rate. The increase was considered a negative factor for most industry players, and both manufacturers and retailers fear that this rise will retract toys sales more than expected during this Christmas. The Spanish Association of Toy Manufacturers has traditionally claimed that toy should have the same consideration as a cultural good, seeking a reduction of the VAT tax rate to a super-reduced rate of 4%. However, given the recent increase in VAT, the AEFJ announced that they will not return to their demands until the Spanish economic situation improves.

Italy:

This Mediterranean country also applies the standard rate of VAT on toys, which is 21%. The last rate increase applied took place in September 2011, when the standard tax increased a point on the 20% that was previously applied. Danielle Caroli, editor of the toys trade magazine Giochi & Giocattoli, indicates that, although “it is probably a coincidence, toy sales in the Christmas 2011 season significantly decreased for the first time in many years -about -4% on the previous year-. Just as in Spain, the Italian toy industry claims for a 4% VAT rate application on the toy, the same as on cultural goods. The country expects another increase in VAT to a 22% in the coming months.

 

Portugal:

The Portuguese state gravel toys with the standard rate of VAT, which is 23%. The latest rise in the rate occurred in January 2011, with an increase of three percentage points over the previous rate. Although there is no known claim from the Portuguese toy sector, the country has experienced a contraction of domestic consumption in recent months due to the current economic climate, with its citizens suffering a reduction in its purchasing power.

 

The Netherlands:

The Netherlands is one of the European states that have most recently lived his last VAT increase: in October 2012, the standard VAT rate, which applies to toys, rises from 19% to 21%. However, neither retailers nor manufacturers have a claim. Jan Sinke, editor of the toy trade magazine Speelgoed & Hobby, stats that “everybody is aware of the fact that the government must cut in costs. So, also in toys, people take it as it is”.

Germany:

Toys are taxed at the standard VAT rate, which is 19%. The last increase in this rate was applied in January 2007, and there is no known claim by the German toy industry in relation to this tax.

Sweden:

Sweden is one of the countries with a higher VAT rate applied on toys: 25%. Despite this, the Swedish toy sector has no claim on this rate. The last change in the tax rate was held more than three decades ago.

Denmark:

Together with Sweden, Denmark is one of the countries in which toys support one of the highest VAT rates of the European Union (EU): 25%. However, just as in Sweden, the sector do not claim for a drop in the tax rate.

Norway:

This Nordic country not belonging to the EU applies the standard VAT rate on toys -25% -. There is no claim from toy manufacturers nor toy retailers on this tax, the last increase of which took place during the 1970’s, before the country discovered it own oil and natural gas.

Switzerland:

In the Swiss Confederation also applies the standard VAT rate on toys. However, in this state the rate applied is 8% of the toy value, one of the lowest -if not the most- of the whole of Europe. The last increase in VAT lived in this country took place in January 2010, when the general rate of this tax passes from 7.6% to 8%. According to the toy trade association Spielwaren Verband, there is no evidence of any effect on the sales of toys, and there is also no sector claim related to the VAT rate applicable to toys.