No overnight price hike threat in EU VAT row
The European Commission does not believe house renovation or bike repair prices would suddenly jump up if there is no VAT deal by the weekend, as it will take longer to change national laws on taxation.
The deal was agreed by finance ministers from 22 member states on Tuesday (24 January), but Poland, the Czech republic and Cyprus are still deciding whether or not they will sign up.
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The decision applies to an EU-wide scheme under which member states can levy VAT rates as low as 5 percent instead of their national standard rates on a set of "labour-intensive services," such as small construction works or bike repairs.
At the moment, nine "old" member states are using the derogation, although the scheme legally expired on 31 December.
The ministers on Tuesday agreed that they would postpone the deadline for the project until 2010, but if Warsaw, Prague and Nicosia decide not to bow down to EU pressure, the VAT holiday will end.
The European Commission confirmed it will start infringement procedures against countries carrying on with lower tax during next week.
"Legally all member states that apply reduced rates, they have to come back to the minimum standard VAT rate in the European Union, which is 15 percent," commission spokeswoman Maria Assimakopoulou said on Wednesday.
But she added it is not clear whether in practise countries would be fined if they do not act "immediately" in the event of no VAT deal.
The official added that it is understood that most countries need to "pass laws in national parliaments in order to move from one regime to the other and this can take a certain time."
Meanwhile, the Polish finance minister Zyta Gilowska has hinted that an agreement is likely, while the Czechs and Cypriots have not yet decided on their position.
"We are convinced that negotiations will end favorably," Ms Gilowska said at a news briefing, according to IHT.
"There is goodwill from our side, although the situation is difficult. We are beginning an analysis of the possibility of an amendment of our position," she noted.
Prague - the staunchest critic of the deal on the table has not yet given its last word however, with the country's finance minister Bohuslav Sobotka saying on Tuesday that his government was willing to veto the deal on its own if need be.