14th Aug 2022

Nappy tax issue divides EU commissioners

  • The five sinning countries currently run sales taxes between 5 and 15 percent on nappies (Photo: Wikipedia)

The European Commission has started legal action against five member states for charging a sales tax of less than 15 percent on babies' diapers.

Under current rules, member states must apply a minimum of 15 percent value-added tax (VAT) on wares sold, except in sectors that have applied for exemption such as medical goods and pharmaceuticals.

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Hungary, Malta, Poland, Portugal and the Czech Republic have two months to reply to the "letter of formal notice" which the commission sent off on Wednesday (19 July)- this is the first stage of legal action against the countries.

The five countries' sales taxes on babies' nappies are currently between 5 and 15 percent, despite the product not falling under the VAT exemption regime.

But Brussels is also currently considering steps to ensure a legal basis for reduced VAT on diapers across the bloc in the future.

"The commission fully supports social and family-friendly policies," said a commission spokeswoman.

She indicated that the commission will consider proposing EU-wide diaper tax relief as part of next year's review on the VAT system and will therefore take the five member states' replies "into account positively".

Several commissioners were against the legal action which comes at a time when the commission is trying to improve its image with citizens by cutting mobile phone roaming charges and seeking more transparency on air ticket prices across the bloc.

One commission official said that the commissioners who were against the nappy infringement action were the Czech social affairs commissioner Vladimir Spidla, Lithuanian budget commissioner Dalia Grybauskaite, Malta's Joe Borg responsible for maritime affairs and Sweden's Margot Wallstrom holding the communication portfolio.

During VAT negotiations between EU finance ministers in January, Spain, Lithuania and the Czech Republic asked for diaper VAT rates to be reduced, but their suggestion was blankly rejected.

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