The European Union’s finance ministers decided on Tuesday to change the EU rules so that they can reduce VAT on goods and services related to tackling climate change, health protection and the EU digital transition.
At the same time, they have agreed to abolish some of the existing low rates on fossil fuels or other products that increase greenhouse gas emissions by 2030, so that EU countries can reduce their CO2 emissions by 50.
The lower rates will be applicable after consulting the European Parliament by March 2022.
Today the standard VAT rate on all goods and services is higher than 15%, except for a list of exceptions where the reduced rate must be at least 5%. VAT rates vary between EU countries and products. Some countries have also agreed on specific rates for specific products.
Ministers also agreed that reduced VAT rates and exemptions for chemical fertilizers and chemical pesticides would remain in place until 1 January 2032, to give more time for small-scale farmers to adapt.
The agreement will allow governments to apply lower VAT rates to products and services that make the economy more suited to the digital age, such as internet access and live streaming of cultural and sporting events.
With experience from the COVID-19 pandemic, ministers agreed to include health care equipment such as masks and other medical supplies deemed necessary for people with disabilities in the list of products with lower VAT rates.
Lower VAT rates will also be applicable to products related to combating climate change, such as bicycles, green heating systems and solar panels installed in homes and public buildings.
The lower rates will be applicable after consulting the European Parliament by March 2022.
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