France and Spain in hot water over VAT

France and Spain have been found in breach of European Union (EU) law by
effectively reducing the amount of VAT due on purchases assisted by government

The European Court of Justice (ECJ) said the two countries are breaking the
EU’s sixth VAT directive of 1977.

Both countries argued their systems were fairer, preventing distortions of
competition, however, the ECJ said VAT had to be levied and deducted in full

It highlighted a previous legal opinion that stated: ‘member states are
required to apply the sixth directive even if they consider it to be less than

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