If there is one thing that all countries have in common, it’s taxes. In the U.S., you have sales tax, but in Europe, we have VAT (value added tax). These two types of taxes are very different and very difficult to compare. Where sales tax in the U.S. ranges from 0% to 10.25% and only applies to retail sales, VAT is applied to all sales in the EU. The EU’s VAT ranges from 17% to 25%. A few countries have reduced VAT rates on specific products and services; interestingly for the print industry is that many cultural services like books, art, and music have reduced VAT rates—and some are very low.

At first, this can look like a huge difference, but remember that value added tax is entirely different from sales tax. When you as a company purchase goods—such as paper, ink, plates, equipment, etc.—the VAT will be applied to the price you have agreed to pay. However, the VAT is against your sales VAT, meaning that if you buy for, let’s say, €100 and you sell for €150, your actual payment will be the VAT rate on the difference, which is where the name “value added tax” comes from. VAT, therefore, doesn’t influence your profit on a product but can have a significant influence on your cash flow. If you operate your business from one member country and buy goods from another member country, VAT will not be applicable, which in my opinion gives an uneven and unfair competitive advantage to companies operating like this.

Most countries in Europe require prices to individuals to be specified as “incl. VAT” which makes the price comparison easier for a consumer, but provides a very uneven perspective. If you sell consumer products—i.e., photo books and other end-user products—many countries in the EU require you to collect the VAT that applies to the customer’s country, which of course requires more administration. (It’s not unlike having to keep track of sales tax rates for individual states.) However, this only applies if you sell to consumers and if you exceed specific revenues.