Salary FYI

VAT (Value Added Tax)

Tax

A consumption tax levied at each stage of production and distribution, collected incrementally based on the value added at each stage.

## VAT (Value Added Tax)

VAT is the world's most common consumption tax, used by over 170 countries. Unlike sales tax (collected only at point of sale), VAT is collected at every stage of the supply chain.

### How It Works

Each business charges VAT on sales (output VAT) and reclaims VAT on purchases (input VAT). Only the net difference is remitted to the government, ensuring tax is collected on value added at each stage.

### Standard Rates

| Country | Standard VAT |
|---------|-------------|
| Hungary | 27% (highest in the world) |
| Germany | 19% |
| UK | 20% |
| France | 20% |
| Japan | 10% |
| Canada (GST) | 5% |
| US | No federal VAT |

### Impact on Salary

VAT doesn't directly reduce salary but affects purchasing power. Higher VAT means goods and services cost more, reducing the real value of take-home pay.