Bulgaria in a Declaration against Reduced VAT Rates

In a joint declaration attached to the political agreement for new options for reduced VAT rates, Bulgaria, Germany, Denmark, Lithuania and Estonia called on other EU states to show restraint in applying reduced rates, since they lead to reduction of the tax base, artificial redistribution of employment without new jobs creation, and increase the administrative burden. The signatories of the declaration will not use the new option for reduced VAT rates

The argument is old, as we are reminded by Jean Quatremer. It is mainly between Germany and France, mainly on restaurant services. The question about the effectiveness of the reduced VAT rates remains under discussion.

2 responses to “Bulgaria in a Declaration against Reduced VAT Rates

  1. I’m afraid EU VAT rates are actually going the other way. Ireland, Hungary, Lithuania and Latvia have put theirs up in the past few months to help balance government deficits. There is an article on this web site about EU VAT http://www.tmf-vat.com/upload/file/Tax%20Planning%20International%20EU%20VAT%20Tracker.pdf rises which says all countries will have to increase their VAT rates over the next couple of years to fund cuts in corporation tax. Germany increased their VAT rate by 3% to 19% a couple of years ago – so our 17.5% was already very low.

  2. Вихър Георгиев

    Spot on, David. But bear in mind that increasing VAT rates may also kick back by expanding the informal economy – a problem that is specifically acute in Bulgaria (check this link: http://www.oecd.org/dataoecd/26/32/41797050.pdf ).

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