Bike repair VAT break is back for a bit

The European Commission has performed a u-turn and has asked EU ministers to extend for two years a pilot scheme allowing the Belgian, Dutch and Luxembourg governments to continue levying reduced VAT rates of six percent on bicycle repair services.
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Earlier this year Brussels-based bureaucrats at the European Commission said they wanted the scheme to end this month, but a volte face has now occurred, following requests from ministers and MEPs.

The aim of the scheme is to create jobs in labour intensive sectors, such as bike repairs, and erode the attractiveness of working in the black market, but the Commission concluded this summer that the VAT cut had failed to sufficiently generate new employment, or indeed lower prices.

However, with Member States so far failing to approve another proposal to rationalise and simplify EU VAT rules in general, the Commission has relaxed its opposition to an extension, allowing these three countries to continue the scheme until December 2005.

It was launched in January 2000 and had already been extended one year. The further extension means there is now a slim possibility that these VAT rate reductions for cycle repairs could be made permanent and even be offered across the whole EU.

The UK government has not so far been minded to apply the VAT break for UK bike repairers.

By Keith Nuthall.

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