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EU Delays Decision On Extending Reduced VAT Deadline

by Ulrika Lomas, Tax-News.com, Brussels

08 December 2005


It emerged on Tuesday that further discussion on proposals to extend the deadline for the ending of reduced VAT rates on labour intensive services has been postponed until the next meeting of the European Council, on December 15-16.

The labour-intensive services under discussion - which include hairdressing, some repair work, small-scale construction, and restaurants - are currently covered in some member states by a provisional measure, set to expire at the end of this year.

Germany has been vehement in its opposition of the proposals, but according to reports, Finance Minister Peer Steinbrueck hinted at Tuesday's ECOFIN meeting that if debate on the matter was delayed until next week, the German authorities may consider some 'flexibility' on the matter.

Austria, which is set to assume the presidency of the European Union in January, appears pessimistic with regard to the prospect of resolving the dispute quickly, and has revealed that it will organise a meeting to discuss extending the deadline in early January if necessary.

Taxation Commissioner, Lazlo Kovacs has meanwhile pledged to try to secure an exemption from legal action for member states which keep the lower rates in place for a few weeks after their expiry.


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