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Brussels, 24 November 2010

VAT: Commission refers Ireland to EU Court over reduced VAT rate for horses and greyhounds

The European Commission has today decided to refer Ireland to the EU's Court of Justice over its application of a 4.8% reduced VAT rate for supplies of horses and greyhounds. This reduced rate is not in line with the provisions of the VAT Directive (2006/112/EC), and could cause a distortion of competition within the EU. The Commission had sent a reasoned opinion – the second stage of an infringement procedure - to Ireland in June 2010 (IP/10/796). As it failed to comply with EU law, the Commission has today decided to take Ireland to the Court.

Annex III of the VAT Directive sets out a list of goods to which Member States may apply a reduced VAT rate. This list must be strictly interpreted and applied, in order to ensure fair competition within the EU.

One exception is that VAT exemptions or reduced rates which were being applied by Member States on 1 January 1991 can continue to be applied, even if they are not now eligible under Annex III. This is on the condition that they have been adopted for clearly defined social reasons and to the benefit of the final consumer.

In view of this exception, Ireland continued to apply a reduced VAT rate of 4.8% for the supply and hire of live horses, for the supply of greyhounds and for the sale of stud services. The Commission considers that there is no clearly defined social reason for allowing such a reduced rate, nor does the final consumer seem to be benefiting from the measure. Therefore, Ireland's application of a reduced VAT rate for horses and greyhounds is not in compliance with EU law.

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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