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VAT at table proving hard for EU partners to digest

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VAT at table proving hard for EU partners to digest

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A Europe-wide deal on VAT exemptions still looks a far-off prospect although current EU presidency Luxembourg is straining to accommodate everyone’s wishes. Diplomats involved in talks say Denmark, Sweden and Germany remain strongly against adding to the list of goods and services to which members could apply reduced rates. Tax policy in the EU requires all members’ approval for changes.

Those who apply high VAT on restaurant meals, like the Scandinavians, are blocking France’s bid to bring down its 19.6% rate on restuarant meals — a political campaign promise. Berlin, struggling to stabilise its finances, does not want to be exposed to its own restaurateurs demanding the same thing. VAT rates average between 15 and 25 percent in the EU, but special reductions make this rate fall in certain areas. Each member can choose some exceptions. Luxembourg is proposing that the members submit their wish lists by January 1, in an effort to limit to a few months the pressure on various governments. This July, the UK takes up the EU presidency. Finding tax compromises could prove especially elusive.