Over the past month an increasing number of European countries have announced upcoming VAT reductions applying to a wide range of goods and services. Whilst many of these have been in the pipeline for many months, others have been as a result of changing governments, foreign pressures and the need to remain competitive in a constantly changing landscape.
Below is a review of the European reductions to VAT announced in July 2019.
The Czech Republic is significantly reducing the VAT rate from 21% to 10% on certain goods and services.
Reduction of VAT rate from 21% to 10% for:
- The repair or modification of clothing and other textile products.
- Any services relating to hairdressing or barbers.
- The repair of footwear and other leather goods.
- The repair and maintenance of bicycles.
Reduction of VAT rate from 15% to 10% for:
- Water and sewerage charges relating to commercial and residential buildings.
- Catering and soft drinks services.
The Hungarian government have approved proposals to reduce the VAT rate applied on hotel accommodation from 18% to 5% as of 2020.
VAT on accommodation in hotels, ‘Bed & Breakfasts’ and house sharing (such as Airbnb) will all benefit from the VAT reduction. It appears as if Hungary is following suit with the majority of other EU countries who now offer a reduced VAT rate on hotel and accommodation services linked to the tourism trade.
The Romanian Senate will be reducing the standard 19% VAT rate to 16% and reduce the reduced 9% VAT rate to 5%. The reductions are likely to be introduced from 1st January 2020.
Also, certain split-payment mechanisms are to be implemented as well, with more information to be announced shortly.
As previously stated, the new government in Greece have announced the gradual reduction of VAT from 24% to 22% over a two year period, as well as a reduction of corporate tax from 28% to 20%.