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Reduced VAT rates are an important tool to support the development of PHS

On the 6th of February, EFSI sent a letter to the European Commissioner for Taxation, Algirdas Šemeta, in order to emphasize the positive effect of reduced VAT rates on growth and jobs in the personal and household services sector.

In the framework of the current review of the VAT system, EFSI calls on the European Commission to maintain Member States’ competence to decide whether or not they will apply reduced rates.

In addition, EFSI urges the European Commission to add to the list stated in Annex III of the Directive 2006/112/CE a comprehensive category as such for “personal and household services” – defined as all activities that contributes to well being at home of families and individuals – to which reduced rates shall be applied.

Due to its high employment content and high labour costs, the personal and household services sector cannot develop in the formal economy without supporting measures. Thus, limiting the scope of reduced VAT rates will endanger the sector’s development. Currently, at least 12 Member States apply a reduced rate to at least one personal and household services listed in Annex III of the Directive 2006/112/CE.