News Article

Compromise Proposal on Special VAT Tariff

Laws & Regulations

BRUSSELS, Belgium (Jan 24) – Despite the favourable advise, given by the current chair-country, the UK, the European commission still has not reached a unanimous decision on VAT tariffs. Bicycle repair shops, cobblers, tailors and hairdressers now have the advantage of a VAT tariff of 6% instead of 19% in most EU countries. The Netherlands […]

BRUSSELS, Belgium (Jan 24) – Despite the favourable advise, given by the current chair-country, the UK, the European commission still has not reached a unanimous decision on VAT tariffs. Bicycle repair shops, cobblers, tailors and hairdressers now have the advantage of a VAT tariff of 6% instead of 19% in most EU countries. The Netherlands favours a definite low tariff for these service professions, but Germany is square against such a rule. Reason being that the Germans argue that the 6% VAT does not result in more jobs in these sectors: something the other EU countries either dispute or have not as yet investigated. Germany claims it has, and the results are nil -hence their reluctance to agree with the proposal. Now Austria has come up with a plan of meeting half-way: leave the current 6% intact until 2010, which gives the EU commission the chance to research how many jobs have been created by the rule, which has been in place since January 1st, 2000. Reason behind the idea is that labour intensive work, like repairing bicycles, would simply become too expensive to be accessible for all, next to the creation of new jobs I these fields. A simple example explains it best: on a repair taking 60 minutes, and costing € 60, a 19% VAT would make the total € 71.40 – but the 6% tariff would bring the grand total to just €63.60 – a serious difference. On the year budget of an average workshop, it could indeed make the difference between having one or two mechanics on the job…(MH)

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