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EU finance ministers agree on standardized preferential VAT rates

EU finance ministers agreed to standardize preferential VAT rates at a meeting in Brussels, EU Commissioner for Tax and Customs László Kovács said.

Three member states, including Hungary, signaled they still need consultations on the issue, but this should not present any new obstacles, Kovács said.

VAT rates in member states must be between 15% and 25% under EU rules. Exceptions have been allowed for some activities that require a large degree of physical labor, such as shoe repair, hairdressing and building construction. But the rule allowing these exceptions was set to expire in 2010.

There were two main sides to the debate on Tuesday, Kovács said. A smaller group of member states, led by Germany, said the preferential VAT rates reduce state revenue and go against market competition. The majority of member states said the preferential rates help create jobs and offer an incentive for energy efficiency. (MTI – Econews)