EU tax overview: residence, VAT and double taxation

Income tax is national

There are no EU-wide income tax rates or filing deadlines. Each member state runs its own income tax. The EU makes sure cross-border workers are not discriminated against. The FASTER directive (2024) speeds up relief from withholding tax.

Where are you tax resident?

You are usually tax resident in the country where you spend more than six months a year, and that country normally taxes your worldwide income. Cross-border commuters are generally taxed where they work.

Double taxation

If two countries tax the same income, relief comes from bilateral tax treaties between them, not from EU law.

VAT rules (VAT Directive 2006/112/EC)

• Standard rate of at least 15%.
• Up to two reduced rates of at least 5%, for listed goods and services.
• Since 2022, one super-reduced rate below 5% and one zero rate, allowed for a limited list of items.

Each country’s actual rates differ; check its own tax authority.

Social security

Contributions are national, and EU coordination rules decide which single country’s system covers you. Needs review.

Moving from India

If you move from India to an EU country, both countries’ rules can apply in the year you move.

• Check your Indian status for that year in Residential status. It decides whether India taxes only your Indian income or your worldwide income.
• Savings accounts usually need to change to NRO/NRE accounts. See NRI bank accounts.
• Money you send abroad before you leave falls under the Liberalised Remittance Scheme. See Foreign remittance (LRS).
• If both countries tax the same income, India’s tax treaty with an EU country may give relief. Read the treaty text before you rely on it.