EU Commission acts on states VAT rule breaking

The European Commission (EC) has issued a range of first warnings – infringement procedure - to certain member states for infringing the VAT Directive rules. Affected member states generally have two months to respond, including the right to appeal.

The warnings have been sent to:

• Lithuania - Including the separate income of business owners in the calculation of VAT registration thresholds.
• Romania - Failure to introduce all unregistered businesses to apply for the One-Stop Shop return.
• Cyprus - Cyprus allows a 5% reduced rate on dwellings. The VAT Directive does allow Member States to apply a reduced rate of VAT on housing as part of a social policy.