Tax & Accounting Blog

United Kingdom: Going to Court Over Reduced VAT Rate

Indirect Tax, ONESOURCE, Transaction Tax April 17, 2013

On 21 February 2013, the European Commission (Commission) referred the United Kingdom to the EU Court of Justice for its application of the reduced VAT rate on the supply and installation of energy-saving materials. Although the VAT Directive (Directive) allows for a reduced rate on the supply of goods and services used in the housing sector, the rate reduction only applies to supplies made as part of a social policy. The Commission has taken the position that the general exemption for energy-saving materials goes beyond the scope of what is permitted by the Directive.

The Europa press release is available here: