Europe Reforms V.A.T. for Window Cleaners

The EU has given the green light to the UK to extend its reverse charge VAT (value added tax)scheme aimed at cracking down on carousel fraud. The council declared that "that reduced VAT rates may, depending on the circumstances, have positive and negative economic effects, so that more efficient alternative solutions should always be considered before a member state decides to use the option to apply reduced VAT rate." More efficient alternatives presumably being in short supply, the council then decided that that all member states should have the option to apply reduced VAT rates on a permanent basis to a range of economic activity. The ministers also struck a rare blow for transparency, OK-ing reduced VAT on "Window-cleaning and cleaning in private households".
Personal services also scored a potential VAT reduction, with the ministers giving their blessing to cuts on "domestic care services such as home help and care of young, elderly, sick or disabled" as well as hairdressing. Perhaps recognising that the building sector is crumbling before our eyes, members are at liberty to reduce VAT on the "renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied".

Amidst all these (potential) VAT giveaways, there was barely space to record that the UK has been given a two-year extension to the reverse charge VAT regime which aims to bring carousel frauds to a juddering halt, and actually ensure that VAT money flows into the Exchequer. It's difficult to know whether the scheme, kicked off two years ago, is actually having an effect. However, there seems to be less alarm at Whitehall about the scams, which last year were estimated to be costing the UK around £3bn in lost receipts. Then again, that does seem like peanuts when compared to the billions being used to prop up the UK's banking sector.
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The Economic and Financial Affairs Council (Ecofin), chaired by Czech finance minister Miroslav Kalousek (pictured) agreed at a meeting in Brussels on March 10 2009 to reduce value-added tax (VAT) in some sectors. The ministers reached agreement on a short list that included, above all, labour-intensive local services, where all European Union member states should be allowed to permanently apply the reduced VAT rate. These services include small repair services of bicycles, shoes, leatherware, textile furnishings and clothes, window cleaning and household cleaning, hair salons and the provision of home nursing services."This will mean lower tax revenues, but without a deal, consumers would have ended up paying more, at a time when no one wants further brakes on spending," Euronews said. The EU currently has a patchwork of reduced rates of value-added tax on labour-intensive services, such as home care for the elderly, hairdressing or home repairs.
The Wall Street Journal said that Bulgaria, Denmark, Estonia, Germany and Lithuania said in a statement that they did not intend to take advantage of the cut in taxes. Ecofin also called for International Monetary Fund resources for countries in trouble to be doubled to $500 billion. The agreement also stipulates that the reduced VAT rate will not apply to the other items contained in a European Commission proposal presented in July 2009. The Wall Street Journal said that Bulgaria, Denmark, Estonia, Germany and Lithuania said in a statement that they did not intend to take advantage of the cut in taxes. Ecofin also called for International Monetary Fund resources for countries in trouble to be doubled to $500 billion.