- EU legislation sets the framework for how Member States can apply different VAT rates to goods and services.
- Preferential VAT rates are used to achieve policy goals, such as supporting low-income households or promoting certain goods, but can cause legal and administrative complexity and revenue losses.
- There are concerns about whether lower VAT rates actually benefit consumers, as businesses may not fully pass on the savings.
- The European Parliament has called for regular reviews of preferential VAT rates to ensure they are necessary and effective.
- Balancing social objectives, market efficiency, and revenue collection in VAT policy is crucial for fiscal sustainability and fairness in the EU.
Source: europarl.europa.eu
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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