Press Release: VAT: Commission proposes categories of services to which Member States may apply a reduced rate

On 7 July, 2008, the European Commission proposed to change the VAT Directive 2006/112/EC so as to provide Member States with the flexibility to apply reduced VAT rates for some specific services on a permanent basis. The Commission proposal covered areas where there is sufficient evidence that reduced rates do not create problems for the proper functioning of the Internal Market. The sectors concerned were mainly so called labour-intensive services and locally supplied services, including restaurant services. The proposal was also part of the small business act as SMEs dominate the sectors concerned. The proposal does not alter the principle that the application of reduced rates is optional for Member States.

European Commission: MEMO/08/481: Communication on VAT reduced rates – Frequently Asked Questions http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/481&format=HTML&aged=0&language=EN&guiLanguage=en

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