VAT reduced rate consultation

On 4 January 2013, Europa Nostra and two of its member organisations, the European Historic Houses Association and the European Landowners’ Organization, sent a joint contribution to the online consultation of the European Commission on the “Review of existing legislation on VAT reduced rates”.

In December 2011 the Commission adopted a Communication on the future of VAT that sets out the fundamental characteristics that must underlie the new VAT regime, and priority actions needed to create a simpler, more efficient and more robust VAT system in the EU.

One of the priority actions was a review of the current VAT rates structure, based on the following guiding principles:

1. Abolition of those reduced rates which constitute an obstacle to the proper functioning of the internal market. Reduced rates justified in the past can have distorting effects today because the economic, business and legal environments have changed in the meantime;

2. Abolition of reduced rates on goods and services whose consumption is discouraged by other EU policies. This could notably be the case for goods and services harmful to the environment, health and welfare;

3. Similar goods and services should be subject to the same VAT rate and progress in technology should be taken into account in this respect, so that the challenge of convergence between the on-line and the physical environment is addressed.

The Commission sought the opinion of stakeholders on various VAT rates structure in the light of the above three guiding principles, including the best application of reduced VAT rate for housing to take the resource efficiency element into account, on which Europa Nostra and its partners sent their joint contribution stressing the importance to encourage VAT reduced rates on restoration works to encourage repairs and renovations for social, economic but also environmental reasons, including resource efficiency.

Since many years, Europa Nostra has been advocating the need to introduce on a permanent basis reduced VAT rates for labour intensive services related to the renovation and maintenance of places of worship, cultural heritage and historic monuments, convinced that it could make a significant contribution to the quality of our historic environment and the creation of new jobs. This consultation was a new opportunity to convince policy makers of our standpoint highlighting the resource efficiency element.

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