European Commission Calls for UK to Change Reduced Tax for Energy Saving Materials

THE European Commission has asked the UK to amend its legislation which allows a reduced tax rate, Value Added Tax (VAT), for the supply and installation of "energy-saving materials".

The Commission claims that the UK’s VAT ruling on this goes beyond the scope allowed under the EU VAT Directive.

Under EU VAT rules, Member States can only apply reduced VAT rates to a limited number of goods and services, which are clearly listed in Annex III of the VAT Directive.

This list does not include the supply and installation of "energy saving materials". Therefore, the UK's application of a reduced rate in this area contravenes EU legislation.

If the legislation is not brought into compliance within two months, the Commission may refer the matter to the European Court of Justice.

Picture of European Commission Berlaymont building by TP Holland reproduced under CCL.

Monday 25th June 2012

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