Currently domestic installations of Energy Saving Materials and technologies  only attract the reduced rate of VAT at 5%.

However if Brussels Bureaucrats have their way then the cost of any energy saving measure to domestic customers will go up by 15% as they levy the full rate 20% VAT.

What does this mean?

Potentially two things,

1) it could kill the Governments’ Green Deal initiative before it has even started

and

2) It could be the final nail in the coffin of self funded domestic PV installations.

Below is the latest information from Brussels

VAT: Commission requests UK to amend its rules on reduced rates

The European Commission has asked the United Kingdom to amend its legislation which allows a reduced VAT rate for the supply and installation of "energy-saving materials". This measure goes beyond the scope allowed under the VAT Directive.

Under EU VAT rules, Member States can only apply reduced VAT rates to a limited number of goods and services, which are clearly listed in Annex III of the VAT Directive. This list does not include the supply and installation of "energy saving materials". Therefore, the UK’s application of a reduced rate in this area contravenes EU legislation.

The request takes the form of a Reasoned Opinion (the second stage of an infringement procedure). If the legislation is not brought into compliance within two months, the Commission may refer the matter to the European Court of Justice.

Background

For press releases on infringement cases in the taxation or customs field see:

http://ec.europa.eu/taxation_customs/common/infringements/infringement_cases/index_en.htm

For more information on EU infringement procedures, see MEMO/12/464

For the latest general information on infringement measures against Member States see:

http://ec.europa.eu/eu_law/infringements/infringements_en.htm

 

and you can see the original here:

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/676&format=HTML&aged=0&language=EN&guiLanguage=en