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Changing V-A-T

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Changing V-A-T


After years of holding out, the finance ministers of the European Union have agreed on a deal for reduced rates of sales tax on local services. Not only for restaurant meals, for which France has long wanted to apply less than the basic 15 percent… Brussels has proposed that countries standardise which services or products they apply reduced rates to.

Germany had been among those hardest to convince to streamline and make permanent a system of reduced rates, the current form of which expires in 2010. This will mean lower tax revenues, but without a deal, consumers would have ended up paying more, at a time when no one wants further brakes on spending. The EU currently has a patchwork of reduced rates of value-added tax on labour-intensive services, such as home care for the elderly, hairdressing or home repairs.

Berlin accepted on condition the reduced application is limited. No lower rate on environment-friendly goods, for instance. As for the rest, five-to-fifteen-percent rates remain to be worked out. French restaurants will finally have a chance to prove that lighter tax at the end of a meal will keep customers sweet and their people employed.

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