The European Commission has presented today its proposals for a reorganisation of VAT rates in the EU, giving Member States more leeway. Since 1992, VAT in the EU had to be at least 15 percent. Member States may also introduce one or two additional reduced rates which may not be less than five percent. Consequently, there are currently more than 250 reduced VAT rates in the EU. According to plans by the EU Commission, each country shall now to be allowed to introduce a reduced rate of between five and zero percent in addition to the already existing reduced rates. Furthermore, the member states will be given the opportunity to introduce VAT incentives for even more products and services. The Commission is also proposing today to facilitate the application of VAT rules for small and medium-sized enterprises.
Sven Giegold, spokesperson for economic and financial affairs for the Greens/EFA Group in the European Parliament, comments:
“It is absolutely right that the European Commission finally wants to take the burden of small businesses from VAT, irrespective of where they are registered and independent of the rules of the Member States. The common European internal market must work for all companies, size must not play a role. We need to provide small and medium-sized enterprises with simpler rules on invoicing and VAT returns. A 85,000 Euro limit also allows smaller traders to sell their products throughout the EU and prevents abuse by large companies.
Unfortunately, the European Commission is not making any attempt to harmonise rates for highly reduced VAT rates in the Member States. There is a threat of an even stronger patchwork of products and services to which low tax rates are applied. Different VAT rates for goods and services do not fulfil the promise of a European single market. We call for at least a positive list of goods and services that benefit from VAT, in line with the European Union’s commitments to the Paris Agreement and the social objectives of the European Union. It is hard to understand why on tampons a higher VAT is applied, whereas some luxury products benefit from generous tax breaks.”