VAT exempt products - does UK or EU control which things are
Discussion
Listening to the radio the other day and was surprised to hear that sanitary products have VAT on them 'because the EU insists on it and we cannot change this until we leave the EU'
A quick bit of reading suggests that yes the EU sets a minimum rate of VAT (with various caveats around old rates applied in various countries), but I can't see anything that tells me if it is the EU or the UK that decides what things actually attract VAT.
Anyone know? Have a link?
thanks
A quick bit of reading suggests that yes the EU sets a minimum rate of VAT (with various caveats around old rates applied in various countries), but I can't see anything that tells me if it is the EU or the UK that decides what things actually attract VAT.
Anyone know? Have a link?
thanks
The EU does indeed dictate what goods and services are included within the VAT regulations. VAT is, after all, a tax based on our belonging to the EU.
However, they leave it up to each EU country to decide what VAT rates to apply to specific goods and services. Therefore, female sanitary products are, by law, chargeable to VAT. What the UK COULD do is allocate them to the Zero Rate list of items. Zero Rate VAT is a rate of VAT - so items included as Zero Rate items are still VATable (and therefore comply with the EU VAT rules).
If an item is categorised as "VAT Exempt" or "Outside the Scope" of VAT, it can only fit into those two categories if the overarching EU VAT rules allow it.
Many people do not realise that there are three reasons why a product or service may not VAT applied to it. The three categories are -
Zero Rated
VAT Exempt
Outside the Scope
However, they leave it up to each EU country to decide what VAT rates to apply to specific goods and services. Therefore, female sanitary products are, by law, chargeable to VAT. What the UK COULD do is allocate them to the Zero Rate list of items. Zero Rate VAT is a rate of VAT - so items included as Zero Rate items are still VATable (and therefore comply with the EU VAT rules).
If an item is categorised as "VAT Exempt" or "Outside the Scope" of VAT, it can only fit into those two categories if the overarching EU VAT rules allow it.
Many people do not realise that there are three reasons why a product or service may not VAT applied to it. The three categories are -
Zero Rated
VAT Exempt
Outside the Scope
Eric Mc said:
What the UK COULD do is allocate them to the Zero Rate list of items. Zero Rate VAT is a rate of VAT - so items included as Zero Rate items are still VATable (and therefore comply with the EU VAT rules).
Thank Eric,So the UK does have the ability to do that?
wikipaedia said:
https://en.wikipedia.org/wiki/European_Union_value...
However, zero-rating remains in some member states, most notably the UK and Ireland, as a legacy of pre-EU legislation. These member states have been granted a derogation to continue existing zero-rating but cannot add new goods or services.
I'm generally deeply sceptical of claims blaming things on the EU, too often it turns out to be blatant lies, but this is looking like it might be sort of true.However, zero-rating remains in some member states, most notably the UK and Ireland, as a legacy of pre-EU legislation. These member states have been granted a derogation to continue existing zero-rating but cannot add new goods or services.
VAT is complex.
And anyone who might have thought that VAT might disappear after Brexit will be sorely disappointed. Indeed, many countries outside the EU have their own VAT systems these days - so it is a popular form of taxation.
Before Britain and Ireland entered the EEC, they both had a tax on point of sale type tax called (wait for it....)
Sales Tax.
Some of the derogations allowed to the UK and Ireland in respect of Zero Rating were linked to how those goods and services were treated under the old Sales Tax rules.
Brussels has stepped in to correct HM Customs and Excise (as was) on some UK VAT rules. For instance, about 20 years ago they stopped HMCE from insisting that opticians charging VAT on eye tests.
And anyone who might have thought that VAT might disappear after Brexit will be sorely disappointed. Indeed, many countries outside the EU have their own VAT systems these days - so it is a popular form of taxation.
Before Britain and Ireland entered the EEC, they both had a tax on point of sale type tax called (wait for it....)
Sales Tax.
Some of the derogations allowed to the UK and Ireland in respect of Zero Rating were linked to how those goods and services were treated under the old Sales Tax rules.
Brussels has stepped in to correct HM Customs and Excise (as was) on some UK VAT rules. For instance, about 20 years ago they stopped HMCE from insisting that opticians charging VAT on eye tests.
TooLateForAName said:
Eric Mc said:
What the UK COULD do is allocate them to the Zero Rate list of items. Zero Rate VAT is a rate of VAT - so items included as Zero Rate items are still VATable (and therefore comply with the EU VAT rules).
Thank Eric,So the UK does have the ability to do that?
wikipaedia said:
https://en.wikipedia.org/wiki/European_Union_value...
However, zero-rating remains in some member states, most notably the UK and Ireland, as a legacy of pre-EU legislation. These member states have been granted a derogation to continue existing zero-rating but cannot add new goods or services.
I'm generally deeply sceptical of claims blaming things on the EU, too often it turns out to be blatant lies, but this is looking like it might be sort of true.However, zero-rating remains in some member states, most notably the UK and Ireland, as a legacy of pre-EU legislation. These member states have been granted a derogation to continue existing zero-rating but cannot add new goods or services.
Full details here http://researchbriefings.parliament.uk/ResearchBri...
Feminine products aren't exactly "new items". They could be recategorised by the UK government into a category already allowed by the EU for Zero Rating.
It is not beyond the wit of politicians and law makers to reclassify items. if they are so minded to do that.
The short cut has always been to blame the EUI when the UK government didn't want to do things. The good thing about Brexit is that they eventually won't have that excuse to use anymore (although it will take decades for EU rules to become irrelevant - if ever).
It is not beyond the wit of politicians and law makers to reclassify items. if they are so minded to do that.
The short cut has always been to blame the EUI when the UK government didn't want to do things. The good thing about Brexit is that they eventually won't have that excuse to use anymore (although it will take decades for EU rules to become irrelevant - if ever).
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