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Brussels, 24 November 2010

Taxation: Commission requests Spain to amend its provisions on reduced VAT rates for medical items

The European Commission has formally requested Spain to amend its legislation which allows a reduced VAT rate for general medical equipment, appliances to alleviate animals' physical disabilities and substances used in the production of medicines. These measures go beyond the scope allowed under the VAT Directive (2006/112/EC), and may distort competition within the EU. The Commission's request takes the form of a "reasoned opinion" (second step of EU infringement proceedings). In the absence of a satisfactory response within two months, the Commission may refer Spain to EU Court of Justice.

The VAT Directive allows Member States to apply a reduced VAT rate for medical equipment, aids and other appliances which are "normally intended to alleviate or treat disability", and which are "for the exclusive personal use of the disabled". Spain's application of a reduced VAT to medical equipment for general use, and for equipment used for disabled animals goes beyond the scope of what is allowed under the EU legislation as it does not only apply to medical equipment for disabled persons.

Furthermore, the VAT Directive allows a reduced rate to be applied to pharmaceutical products "normally used" for health care, prevention of illnesses and as treatment for medical and veterinary purposes. It does not, however, cover medical substances used in the production of medicines, for which Spain also allows a reduced VAT rate.

The EU legislation on reduced VAT rates must be strictly interpreted and applied, in order to avoid competitive distortions within Member States and across the EU. If a product is not specifically listed in Annex III of the VAT Directive, Member States cannot apply a reduced rate to this product (unless they benefit from a particular derogation, which is not the case for Spain).

For the press releases issued on infringement proceedings in the area of taxation or customs see:

For the most up-to-date general information on the infringement proceedings initiated against Member States, see:

For more information on EU infringement procedures, see MEMO/10/605

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