An EU minister has warned that it may review VAT across the bloc which could call into question Britain’s use of “zero rate” on specific items such as food, medicine and children’s clothing.
The Commission plans to present measures later in spring to overhaul the VAT system.
The comment came from economics commissioner Pierre Moscovici. When he was asked if it would include scrapping the ability to exempt items from VAT, he said: “We will have to reassess everything.”
He added: “Zero rate is not the best idea.”
The EU minimum VAT rate is 5%, but Britain’s zero rate predates this requirement.
That was on Wednesday. By Thursday it appeared Moscovici, a former finance minister in France, he was downplaying his comments, saying he had never said that he supported ending Britain’s right to waive VAT on some items.
It was “far too early” to talk about proposals that may emerge from the review, he noted, pointing out that the UK had a veto on any new arrangements.
Several countries have asked the commission to review the VAT system, partly in light of technological developments.
EU states must levy VAT of at least 15%, but can go as low as 5% on items on the EU “reduced rate” list.
Last year, EU judges ruled that ebooks could not benefit from lower VAT charged on paper equivalents because they were not enshrined in a law drawn up before they were invented.
