The European Commission has launched a public consultation on the reform of VAT rates in Europe (proposal for a Council Directive amending Directive 2006/112/EC). In its response, EGEC stated that the VAT system in the European Union should be aligned to the objectives of the Energy Union and become an effective tool (and not a barrier) to promote investments in energy efficiency and renewable energy.
In particular, it is suggested to extend the exemptions to the application of the standard rate of VAT to renewable energy and energy efficient goods and services. In parallel, it is key to remove VAT exemptions to the use of fossil fuels for non-vulnerable consumers. Today’s exemptions risk to create lock-in effects and contradict the numerous calls for the removal of subsidies and regulatory incentives to fossil fuels.