The zero rate will now include books, whose sale will effectively be completely exempt from VAT.
What will be in the reduced rate (12%)?
The new 12% rate will mainly cover food excluding drinks, tap water and associated sewerage services, funeral services, flats and construction work for housing and social housing, accommodation services and, for example, child car seats. This rate will also include medical materials, equipment and aids, as well as prescription glasses (including frames) and lenses. The lower rate will also cover occasional group passenger transport.
What will newly fall under the standard rate (21%)?
Some items will also move to the standard 21% VAT rate. These include: repairs to footwear, leather goods, clothing and pedal cycles, hairdressing and barber services or household cleaning services. Those of you who enjoy draught beer, air travel and culture will not be pleased either – cinema, theatre, zoo and concert tickets move to the standard rate. Other items under the standard rate will include cut flowers, services of authors and artists and collection, transport and landfilling of municipal waste. Other soft drinks are not forgotten either: mineral water, juices, energy drinks and even water for infants. All these items move to the 21% VAT rate. An unpleasant surprise also awaits those who enjoy the warmth of a fireplace, as the rate on firewood also rises to 21%.
Other goods and services not listed should remain as you are used to, except that items in the two reduced rates (10% and 15%) will move to the single reduced rate (12%).
According to the Ministry of Finance website, this individual proposal has been approved. These changes form part of the large consolidation package, which has not yet been approved as a whole. Alongside VAT changes, it contains other significant developments worth attention, such as changes to corporate and personal taxation and the employment of agreement workers. Still unsure how the changes will affect you? Get in touch and we will certainly work out together what you need to watch out for from the new year in your particular case. 🙂