There is increasing speculation that Rishi Sunak, the UK Chancellor of the Exchequer is reviewing the possibility to reduce VAT rates to boost the economy following the COVID-19 crisis.
Reportedly, the UK Chancellor is looking at options to reduce the standard rate of VAT, currently 20%. This is as well as potentially zero-rating more products. These reductions would likely be in place for a fixed period to boost the economy following the COVID-19 crisis. The aim is to pass these VAT savings onto consumers.
We saw Germany announce a reduction in the VAT rates from July. In addition, there are rumours in Italy that they are also considering a change to their VAT rates. Some Member States already legislated to reduce the VAT rates in the tourism and hospitality industry to provide a boost to these sectors hit hard by the COVID-19 crisis.
We will continue to monitor any changes and provide further updates as they arise. Sign-up to our newsletter to receive these updates straight to your inbox.