“We have claimed and achieved clear solutions in the European legal text on the permanent possibility of applying special VAT rates, for the benefit of society and the economy,” said Finance Minister Christos Staikouras, informing the Parliamentary Committee on Island and Mountain Areas. Of the European Union Finance Minister, ECOFIN, on the updating of the common rules on VAT rates in the EU.
This is a very important agreement for Greece, after 2.5 years of successful negotiations, at European level, of the government and its financial staff, said Mr. Staikouras, noting that it includes special measures concerning critical sectors of the Greek economy and such as the green and digital transition, the strengthening of farmers and the real estate market, the support of the country’s geographical features and the strengthening of social cohesion. At the same time, he added, the decision ensures acquired Greek rights, while expanding the possibility of applying reduced VAT rates in critical sectors, while enhancing the competitiveness of the Greek tax system and the economy as a whole.
Explaining what the agreement stipulates in the amount of VAT rates in the EU, he said that the Member States and Greece will continue to apply the VAT rates they choose, based on their budgetary capabilities, which should not be lower. 15% for the standard VAT rate and a minimum of 5% for up to two reduced VAT rates: “The new Agreement provides an additional possibility for the application of a reduced rate of less than 5% meet basic needs “.
It also provides a restrictive to ensure income, a selection limit of up to 24 different categories for the application of reduced VAT rates and a corresponding limit of up to 7 categories for the application of discounted – zero rates “said Mr. Staikouras, noting that” the categories to be selected are included in a new, enriched list of goods and services, from where reduced / zero VAT rates can apply. In this regard, the new regulations provide flexibility in Greece, even in terms of the application of reduced over 5% and zero VAT rates, if the fiscal conditions allow it, setting some numerical restrictions “.
As for what Greece achieved in the negotiation, Mr. Staikouras said:
1st It secured the possibility for application of reduced VAT rates in the Aegean islands.
The proposal for a Directive, as finally adopted, secures – on a permanent basis – in a European legal text the possibility of Greece to apply special, reduced by up to 30% VAT rates in the Aegean islands, without additional restrictions.
This possibility was eliminated by the Proposal submitted by the European Commission in 2018, which treated the special provision for Greece prevailing in the VAT Directive as transitional and to be abolished under the final VAT regime.
The political leadership of the Ministry of Finance raised the issue of maintaining the special rates in the Aegean islands, linking the Greek request with its final agreement on all the regulations of the proposal and highlighting the peculiarities of Greek insularity but also with legal arguments in favor of the Greek position .
This is a national goal which is now enshrined in the European legal text, with the consent of all Member States, and can be further pursued in the future, if fiscal conditions allow.
2nd Achieved the support of the agricultural sector.
The leadership of the Ministry of Finance focused on the need to support small farmers, reiterating the constant Greek request for the possibility of applying a reduced VAT rate on agricultural machinery and cotton, as a condition of agreement on the proposal and introducing a clause to ensure the possibility of applying reduced VAT chemical pesticides – fertilizers, until after 2030.
Greece reached the unanimous agreement to support the sector, by enabling the application of new reduced rates on cotton, agricultural machinery and other basic agricultural items, with the individual conditions set even through the use of existing systems of other Member States, such as regulations for wine, agricultural oil, etc.
At the same time, Greece can continue to apply reduced VAT rates to services for agricultural production and evaluate the possibility of applying super-reduced, even zero VAT rates, to agricultural supplies / animal feed.
3rd Achieved support for other vulnerable sectors and industries.
The Government and the Ministry of Finance have taken a series of tax measures to support the real estate market, including, in the field of VAT, the suspension of VAT until 31 December 2022.
In addition, it has gained access to existing derogations of other Member States that apply reduced VAT rates in the real estate market, and through the updated new list acquires the right to apply reduced VAT rates in the housing sector under social policy.
In addition, the Ministry of Finance supported and achieved further enrichment of the list of reduced rates, by providing an opportunity, indicatively:
– application of reduced to zero VAT rates on essential items and foodstuffs, solar panels, baby diapers, surgical masks, medical and pharmaceutical equipment, wheelchairs, personal transport, books / newspapers, magazines,
– application of VAT exemption in cases of crises, disasters and pandemics,
– application of reduced VAT rates on live streaming services, internet services, electric bicycles, children’s clothes and shoes,
– application of reduced rates in biogas and / or the installation of high-efficiency and low-emission heating systems, which meet the criteria of environmental legislation,
– continue to apply a reduced (and if desired in the future super-reduced) VAT rate on chemical fertilizers and pesticides until 2032, and on natural gas and, if desired, on firewood by 2030.
All this, of course, always under the conditions that are set and if the financial conditions allow it.
On when and how the new rules can be implemented, the Minister of Finance said that the new Rules, agreed at Council level, will be forwarded for consultation to the European Parliament. The Directive sets a general deadline for the transposition into national law of all Member States on 1 January 2025, for the final implementation of the relevant national provisions.
Mr. Staikouras concluded his speech by saying that “the content of the agreement is, without a doubt, a great success of the country. The Government and the Economic Staff responded to the demands of the society for the strengthening of insularity, the agricultural sector, the real estate market and We have claimed and achieved clear solutions in the European legal text on the permanent possibility of applying special VAT rates for the benefit of society and the economy, all together, with hard work, method, determination and confidence, future”.
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Source From: Capital
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