Brussels, 03/04/2006 (Agence Europe) - Friday 31 March marked the end of the period in which Member States were allowed to apply reduced rates of value added tax (VAT) or if they wanted to modify their list of services benefiting from this measure, to communicate their intentions in this respect to the European Commission. Finland, Hungary, Latvia, Poland, Czech Republic and Slovenia have indicated that they want to apply reduced rates of VAT. Greece, which is already applying reduced rates for certain services, wants to modify the list of services covered. The Commission is expected to present a draft directive to the Ecofin Council amending Annex K of Directive 77/388/ECC on the common value added tax, therefore marking an end to this ongoing affair.
As well as the nine “older” Member States (including Greece), already benefiting from this mechanism (EUROPE 9045), reduced rates of VAT will affect the following services: 1) small repair services (bicycles, cobblers, household clothes and linen) for Greece, Hungary and Finland; 2) renovation and repairs of private accommodation for Greece, Hungary, Latvia, Czech Republic and Slovenia; 3) window cleaning for Greece; 4) home help for Greece, Hungary, and Czech Republic; 5) hairdressing for Finland and Latvia.
At the beginning of 2006, the Ecofin Council extended the transition period till the end of 2010 during which Member States can apply reduced VAT rates for high labour intensive services. This agreement raised a lot of resistance in several new Member States, including the Czech Republic and Poland which wanted to renegotiate certain temporary derogations on VAT granted to them during their accession to the EU (EUROPE 9123 and 9117).