VAT: labour-intensive services
The present directive allows those Member States wishing to do so to experiment with the operation and impact, in terms of job creation, of a targeted reduction of the VAT rate for labour-intensive services.
Council Directive 1999/85/EC of 22 October 1999 amending Directive 77/388/EEC as regards the possibility of applying on an experimental basis a reduced VAT rate on labour-intensive services [Official Journal L 277 of 28.10.1999].
Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - common system of value added tax: uniform basis of assessment provides that Member States may apply either one or two reduced rates, of at least 5%, on supplies of goods and services of a social and cultural nature.
This Directive amends Directive 77/388/EEC. It allows Member States to apply the reduced rates to the services listed in a maximum of two of the categories set out in the Annex.
The services in question are:
- small repair services (bicycles, shoes and leather goods, clothing and household linen);
- renovation and repair of private dwellings, excluding materials which form a significant part of the value of supply;
- window cleaning and cleaning in private households;
- domestic care services;
All these services must satisfy the following requirements:
- they must be local and labour intensive;
- they must be supplied direct to consumers;
- they must not be likely to create distortions for competition;
- they must have a high price elasticity (if their price falls, demand increases).
The Member States must present a general report to the Commission assessing the effectiveness of the measures in terms of its objectives.
The Commission must submit a report to Parliament and the Council on the Directive, its relevance and implementation.
|Act||Entry into force - Date of expiry||Deadline for transposition in the Member States||Official Journal|
|Directive 1999/85/EC||28.10.1999||31.12.2002||OJ L 277 of 28.10.1999|