In January 2000, the EU instigated a trial VAT “experiment” allowing a reduced rate of VAT to be charged on certain labour intensive activities. All EU Member States were able to participate in this trial, aimed at stimulating employment in a number of predetermined service industries. The flexibility of the Agreement with the UK made the Isle of Man eligible to participate in the experiment and it elected to introduce a 5% rate of VAT on domestic property repairs where the labour formed a significant part of the supply. The experiment was due to finish after a 3 year period but was subsequently extended.
REDUCED RATE TO REMAIN UNTIL 31st DECEMBER 2010
In 2006 the EU agreed to an extension of the reduced rate on labour-intensive services until 31st December 2010.
For the full text of the Council of the European Union press release go to
http://ue.eu.int/ueDocs/newsWord/en/misc/88237.doc
For any further information please contact the Advice Centre on 648130
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