The European Builders Confederation (EBC) has voiced its support for the European Commission’s proposal to reduce VAT (value added tax) rates and is encouraging more member states to make use of them in order to renovate the building stock in the European Union.
In early September, the Economic and Monetary Affairs (ECON) Committee of the European Parliament will vote on the draft report regarding the proposal to amend Directive 2006/112/EC with regard to rates of VAT, dealing with the specific rules of applying standard and reduced VAT rates.
Eugenio Quintieri, secretary general of the EBC, said, “EBC welcomes the Commission proposal and the Parliament’s draft report that will allow the current system of reduced VAT rate to be strengthened.”
However, the EBC has emphasised that reduced VAT should be accompanied by better information and coherence because a large diversity of VAT rates can lead to higher administrative burdens and compliance costs, in particular for SMEs (small and medium-sized enterprises).
Therefore, the EBC said it would welcome further harmonisation of VAT rates and provisions between member states in the near future.
In order to limit complexity for enterprises, and specifically construction SMEs that engage in cross-border activities, the EBC has welcomed the proposal by Hungarian politician Tibor Szanyi to establish a Union VAT Web Information Portal that provides quick and accurate access to relevant information for businesses about the implementation of the definitive VAT system in the different member states. However, EBC has gone further by suggesting that the information be offered in all 24 languages and a service be added whereby users can be automatically updated with information about changes of rates in all countries. This would avoid the need to check rates continuously for each new invoice.
Furthermore, the EBC has urged the European Commission to clarify the provision stating that reduced VAT rates and exemptions “shall only benefit the final consumer and shall be applied to pursue, in a consistent manner, an objective of general interest”, because it is unclear what the term “final consumer” refers to. Removing the word “only” as suggested in the amendments by members of the European Parliament Sander Loones and Othmar Karas is seen by the EBC as a step in the right direction because it broadens the provision, but it has been suggested that more clarification should be given to ensure that a single VAT rate – reduced or normal – applies independently of whether the buyer is a private person or a company.