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VAT: Commission proposes to allow 17 Member States to apply reduced rates on labour-intensive services until the end of 2010

Commission Européenne - IP/06/1057   25/07/2006

Autres langues disponibles: FR DE

IP/06/1057

Brussels, 25 July 2006

VAT: Commission proposes to allow 17 Member States to apply reduced rates on labour-intensive services until the end of 2010

The European Commission proposes to allow seventeen Member States to either continue or start to applyreduced rates of Value Added Tax (VAT) until 31 December 2010, on some labour-intensive services such as renovation of private dwellings, hairdressing, window-cleaning, domestic cares and small repairs. This proposal implements the provisions of Directive 2006/18/EC that allows Member States that have chosen so to apply a reduction of VAT on these services.

Directive 2006/18/EC allows in principle the application of a reduced VAT rate to certain specified labour-intensive services and thus translates the agreement of the ECOFIN Council of February (see 6136/06). The objective of the present proposal for a decision is to authorise Member States to apply these reduced rates from the 1 January 2006 until 31 December 2010. On the one hand, Member States that already applied reduced rates according to Directive 1999/85/EC (see IP/99/1002) are authorised to continue to do so. In this case the Member States concerned are : Belgium, France, Italy, Luxemburg, the Netherlands, Portugal, Spain and the United Kingdom.

On the other hand, Member States wishing to apply for the first time a reduced rate to some labour intensive services or wanting to modify their previous authorisation are also authorised to introduce the reduced rates for the sectors the have notified to the Commission before 31 March 2006. Eight (8) Member States made a new request: Cyprus, the Czech Republic, Finland, Hungary, Malta, Latvia, Poland and Slovenia. Greece requested for an extension of the scope of its previous request.

In the table below, a summary of the proposal is presented:

MEMBER STATES
CATEGORIES OF LABOUR-INTENSIVE SERVICES
BE
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration);
- Renovation and repairing of private dwellings completed more than 5 years ago, excluding materials which form a significant part of the value of the supply.
CY
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
– Hairdressing
CZ
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
- Window cleaning and cleaning in private households
– Domestic cares
EL
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration)
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
– Domestic cares
ES
- Bricklaying work for the repair of private dwellings, excluding materials which form a significant part of the value of the supply ;
– Hairdressing
FI
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration);
- Hairdressing
FR
- Renovation and repairing of private dwellings completed at least 2 years ago, excluding materials which form a significant part of the value of the supply
- Window cleaning and cleaning in private households
- Domestic care services
HU
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration)
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
– Domestic cares
IT
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
- Domestic care services.
LU
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration);
- Window cleaning and cleaning in private households
– Hairdressing
LV
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
– Hairdressing
MT
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration)
– Domestic cares
NL
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration)
- Painting and plastering services for the renovation and repairing of private dwellings more than fifteen years old, excluding materials which form a significant part of the value of the supply
– Hairdressing
PL
- Small services of repairing:
a) Bicycles,
b) Shoes and leather goods,
c) Clothing and household linen (including mending and alteration)
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
- Hairdressing;
PT
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
– Domestic cares
SI
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply
UK
- Renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply, but for the Isle of Man only

Further details concerning reduced VAT rates for labour-intensive services are available on the Europa website:

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/labour_intensive_services/index_en.htm

It is recalled that the Council also invited the Commission to launch a study by an independent think tank to analyse the impacts of a reduced rate on employment, economic activity and the functioning of the Internal Market. This study is currently being launched and results can be expected in 2007 as requested by the Council.


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