All PHS should equally benefit from VAT reduced rates
This is the main message of EFSI’s contribution to the public consultation on the review of VAT reduced rates rules.
On the 20th of March 2017, EFSI submitted its contribution to the public consultation on the review of VAT reduced rates rules. It recalls that due to its high employment content and high labour costs, the personal and household services (PHS) sector cannot develop in the formal economy without supporting measures. Indeed, reduced VAT rates help offset the distortion created by taxation in general in a sector which can easily be substituted by do-it-yourself home production and undeclared work. In this context, tax incentives and reduced VAT rates implemented by many Member States have all their importance.
Thus, EFSI pleads that all services belonging to the PHS sector should be eligible for VAT reduced rates which it’s not currently the case. Furthermore, further coherence should be ensured by granting the same VAT regime to any type of PHS services benefit whatever the way or the place they are performed. These could be attained by giving more flexibility to Member States in setting VAT rates and abolishing the current list of goods and services eligible to reduced rates.
EFSI’s reply to the public consultation is available here.