VAT reduction on electricity?

Energy aid package on Monday

VAT reduction on electricity? 1
Portuguese Prime Minister Antonio Costa

Diário de Notícias reports that Portugal, like any other member state of the European Union (EU), can lower the VAT on gas and electricity to the minimum rate without having to ask Brussels for permission. The EU directive on this tax was amended in April, exempting countries from requesting approval from the VAT Committee. However, it limits the application of the reduced rate to a list of 24 of the 29 eligible categories, in which electricity, gas and district cooling supplies are found. The European directive allows the government to lower VAT on gas and electricity from 23% to a minimum rate of 6%

The respected newspaper reports reduction of VAT from 23% to the minimum rate of 6% is one of the measures that the government can adopt, next Monday, to mitigate the impacts on families of the escalation of inflation, namely, the rise in energy prices. , since there is no legal impediment.

However, the prime minister, António Costa, does not want to anticipate the type of support that the executive will approve in an extraordinary Council of Ministers and reserves the announcement of the aid package for Monday: “It is necessary to ensure that families are able to face this situation and that’s what we’re working on. And Monday is almost the day after tomorrow”.

Companies will have to wait a few more days for support measures. Asked if Portugal is considering reducing VAT on gas, as announced by Spain, Costa said only that “it only makes sense to announce new measures after the Council of European Energy Ministers on September 9”. At that summit, the prime minister hopes that “the EU will approve a set of measures, namely the reform of the electricity market”.

The official defended that a “structural reform” is needed and was optimistic about the outcome of the meeting of European energy ministers, since the president of the European Commission, Ursula von der Leyen, has already recognized “the need to carry out a reform market structure”. In the same vein, the President of the Republic, Marcelo Rebelo de Sousa, prefers joint action by the entire community bloc: “I think that, at this moment, in all countries, a set of measures has to be considered. agreed at European level, otherwise inequalities in Europe will increase”.

Thanks to PeterA for the link.

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