EC aims to extend 15% minimum VAT rate

The European Commission has asked European Union (EU) ministers to extend an existing EU 15% VAT minimum rate for five years, writing off greater harmonisation.

Link: UK seeks to soften VAT blow

Assuming this is agreed, the system would remain until January 2011.

It dates back to the single European market’s creation in 1992, when the Commission wanted a narrow band of VAT rates. This was rejected by national governments wanting greater freedom, and Brussels could only sell a minimum rate system. This was underlined by the accession of 10 countries last May, whose rates range from 15 to 25%.

‘It appears appropriate to maintain a minimum standard rate of 15%’, said the Commission.

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