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Commission signals need for VAT simplification

brussels bureau

Commission signals need for VAT simplification


The European Commission has stressed the need to simplify the various rates of VAT which are in force throughout the EU – in particular, the several different reduced rates which countries operate.

Currently, there is a wide range of VAT rates across Europe, ranging from the minimum level allowed – 15 per cent – in Luxembourg and Cyprus, to 25 per cent in Sweden and Denmark.

But these are the standard rates. Different countries also have varying lower rates of VAT, which are due to be reviewed by the EU on different dates.

The commissioner for tax and customs union, Laszlo Kovacs, wants to introduce more uniformity.

“The date which I suggest, the end of 2010 is very convenient because that is the end of the current rule which was set as 15% of the standard VAT rates, and this is the same deadline for the application of reduced VAT rates on labour intensive services,” he said.

The Commission says having to deal with so many differing rates of tax, on a seemingly endless variety goods and services clearly creates a cost for companies operating across European borders, and could create distortions in the internal market.

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