Communication on VAT reduced rates - guide — EUbusiness.com ...
- [
Before an in-depth review of the whole VAT reduced rates structure canbe carried out, a clearer view is needed of the use and effectiveness of reducedVAT rates in promoting certain other policies. However, in order to ensure consistency with the categoryconcerning foodstuffs, the supply of alcoholic beverages is excluded. In thisrespect, abolishing existing reduced rates will have negative impact on theeconomy, in particular on inflation. It thus proposes to include in Annex III all the categories of AnnexIV, which by virtue of Article 107 are local and not likely to distortcompetition, and to extend the scope of reduced VAT rates to some other serviceswhich are local because of their basic characteristics. Moreover, in some sectors, ,it might alsobring back activity in DIY (do-it yourself) or in the black economyOn this basis, the Commission concludes that there are good reasons toinclude local services in the list of goods and services eligible for a reducedVAT rate. On the one hand, it aimed to ascertain the views of all interestedparties on the scope of this review. Reduced rates are optional, and the current proposal will not touch thisprinciple. Services relating to the entire housing sector (including,construction, renovation, repair, maintenance) and to repair and renovation,maintenance of places of worship, cultural heritage and historical monumentswill be eligible for reduced rates. The Commission proposal covers areas where there is sufficient evidence that reduced rates do not create problems for the proper functioning of the Internal Market. The main objective of the consultationwas twofold. The proposal does not alter the principle that the application of reduced rates is optional for Member States. The proposal is also part of the small business act as SMEs dominate the sectors concerned. The proposed changes to the Directive willthus make it possible for Member States to apply reduced VAT rates to renovationand repair work aiming at increased energy-saving and efficiency. The rationalisation of theoverall Community legal framework will be part of future proposals subject topolitical guidance from the Council.Why does the Commission propose reduced rates while the economic studycarried out concludes that one single rate is the best policy choice? The sectors concerned are mainly so called labour-intensive services and locally supplied services, including restaurant services. Theexclusion of these beverages is necessary in order to avoid a standard VAT ratebeing applied to alcoholic beverages bought in shops and a reduced VAT ratebeing applied when they make up part of a restaurant service. Their legal basis is not Annex III (the commonlist of goods and services to which Member States may apply reduced rates)but derogations or the labour intensive services scheme, which are not availableto all Member States in an equal way. They caninduce consumers to shift activities from DIY (do it yourself) and the"underground" economy to the formal economy. This is mainly due to the lack of political guidance from theCouncil. This means,for example, that the installation in a private dwelling of thermal insulation,high performance double glazing, etc. This proposal covers mostly sectors where a lot of Member States are, defacto, applying reduced rates. Those results are expected in theautumn.The Commission will then present the results of these analyses, accompaniedby relevant proposals and recommendations.Does this proposal have any environmental impact at all?Yes absolutely. When will the Commission come up with a proposal on VATreduced rates for environmentally friendly goods and services? Why is the European Commission's proposal limited in scope?Reduced VAT rates are exceptions to the standard rate (minimum 15%). Will thisnot increase compliance costs for restaurant?The addition of restaurant and catering services will offer equal treatmentto all Member States. You must enable cookies before you can log in.
0 comments:
Post a Comment