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UK referred to EU court of justice
The European Commission (EC) has referred the UK to the Court of Justice of the European Union (EU) over the country’s reduced VAT rate on the supply and installation of energy-saving materials – which the EC believes goes beyond what is allowed under the VAT directive.
Member states are permitted to apply reduced rates to the supply of goods and services used in the housing sector, as long as it is part of a social policy.
Energy-saving materials can be covered by the provision if they meet certain conditions, such as being are used for social policy purposes in the construction, renovation and alteration of housing. A reduced rate may not be applied to energy-saving materials specifically.
Referral to the court of justice is the last step in the EU infringement procedure. The EC has acknowleged that the reduced VAT rate has been linked to the UK government’s ‘green deal’ aimed at improving the energy efficiency of buildings.
The commission supports the initiative but said it does not believe that breaking EU rules will help achieve objectives.
