Brussels, 28/10/2015 (Agence Europe) - On Tuesday 27 October, the European Commission announced that it was working on a revision of the EU rules on VAT rates.
The Commission was reacting to events in the United Kingdom the day before, when the government contained a protest movement calling for a zero VAT rating on feminine hygiene products such as tampons and sanitary towels, promising to raise this question with the European Commission.
“The UK does not have the ability to extend unilaterally zero rating to new products (…); any change to EU VAT law would require a proposal from the European Commission and the support of all 28 member states. Without that agreement, we are not permitted to lower rates below 5% (Ed: the current rate)”, announced David Gauke, Financial Secretary to the Treasury.
“EU VAT rules are not imposed by the European Commission, they are decided on and agreed by the member states. Contrary to reports, tampons do benefit from reduced taxation in the UK, 5% instead of the standard 20%”, Vanessa Mock, Commission spokesperson, explained, adding that this was due to the flexibility of the VAT directive. The list of products eligible to benefit from reduced rates was also agreed by the member states. Under the current rules, the states may apply a zero rating to a product only if all of the other states agree. “Zero rates are exceptions and run against the generally accepted VAT principles”, said Mock. The Commission is preparing a revision of the rules, which is expected for 2016. “One option would be to give the member states more flexibility to set their own rates”, Mock concluded. (Elodie Lamer)