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Taxes 2021. Zero VAT on food in Poland – Tadeusz Kościński, Minister of Finance explains

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The ministers of economy and finance of the European Union member states agreed on the text of the amendment to the VAT directive, the Ministry of Finance informed after the meeting of the Economic and Financial Affairs Council (ECOFIN). The ministry said that Poland, without waiting for the formal adoption of the directive, is seeking the consent of the European Commission to introduce a zero VAT rate on food for six months.

The Economic and Financial Affairs Council is responsible in the European Union for three areas: economic policy, taxation and regulation of financial services. The economy and finance ministers of all member states meet in the ECOFIN Council. The relevant European commissioners also participate. On Tuesday, December 7, another ECOFIN meeting was held, during which an agreement was reached on VAT rates.

Finance Minister Tadeusz Kościński, quoted in the communiqué, said that “there have been repeated attempts to obtain consent to the wider use of reduced VAT rates by Poland”.

“Discussions on this subject took place mainly at the meetings of the EU working group on the reform of VAT rates. Each time the answers were the same. It was pointed out that the only way to use the reduced rates more widely than before was to conclude work on amendments to the directive as soon as possible. VAT “- said the head of the Ministry of Finance, quoted in the press release.

“The first step to amend the directive is to reach an agreement on its text. Today it was achieved during the ECOFIN meeting,” added Kościński. “We very much welcome today’s agreement,” stressed the minister.

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Once an agreement is reached on the text of the VAT directive, the next step is the opinion of the European Parliament, followed by the formal adoption of the directive by the EU Council. The ministry predicts that the final decisions will be made in the first half of 2022.


Zero VAT rate on food

At the same time, Minister Kościński announced that Poland was trying to obtain the possibility of applying the zero VAT rate earlier.

“We do not want to wait for the formal adoption of the directive by the Council, which will take place already in 2022. The possibility of applying a zero VAT rate on food is particularly important now, when in Europe we have intensified, inter alia, inflationary phenomena. That is why we are constantly making efforts to ensure that the Commission (European – ed.) Did not question our actions in this direction, and therefore in a letter to Commissioner Gentiloni (European Commissioner for Economic Affairs Paolo Gentiloni – ed.) I again called for the possibility of Poland introducing a zero VAT rate on food for 6 months, counting on favor of the European Commission “- said the head of the Ministry of Finance. According to the Ministry of Finance, the letter on this matter was addressed to the EU commissioner on Thursday.

The ministry informed that among the products indicated in the letter, to be temporarily covered by the 0% rate. VAT are, inter alia, meat and fish and their products, dairy products, vegetables and fruit and their products, cereals, milling industry products, cereal preparations and bakery products, fats and oils, some drinks, e.g. containing at least 20% fruit or vegetable juice, milk drinks and the so-called plant milks.

The Ministry of Finance reminded that each time Poland requested the possibility of a wider use of reduced rates, including 0 percent. VAT (including books and mainly rail transport), the European Commission’s responses were negative. The ministry said that Poland was forced to increase the VAT rate on children’s clothes and shoes a few years ago after the CJEU ruling.

“In the opinion of the Commission, any reduction of VAT rates, even temporary, will be possible only after the completion of work on the draft VAT directive, and any such action by the Member States will result in the commencement of infringement proceedings” – reads the ministry’s press release.

Main photo source: Shutterstock

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