EU finance ministers unite to lower VAT on climate-friendly goods and services

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Lower value added tax (VAT) rates may be on the horizon for goods and services linked to mitigating climate change, like bicycles and solar panels sold in the European Union. Products contributing to digitalisation and health protection (like face masks) could also see reduced rates.

EU finance ministers agreed to rule changes that enable those modified rates on Tuesday, also deciding to kill present low VAT percentages on fossil fuels and goods that contribute to CO2 emissions. Now, all EU member states must agree unanimously to the modified VAT rates for them to be adopted.

The EU’s standard rate on all goods and services stays at 15%, while some member states will still be allowed to maintain certain exemptions, which may be offered to all others as part of a new clause.

The changes, which were approved during Slovenia’s stint at the head of the European Council’s revolving presidency, are part of the EU push for achieving net zero carbon emissions by 2050. The modifications should be headed to the European Parliament for consultation in spring of 2022.

Source: Euractiv

CET Editor

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