Eurozone energy inflation 42% June 2022 (39% May); temporary VAT subsidies for domestic power, foods and other basics
A fast-growing queue of European countries are emerging to cut their already reduced VAT rates on domestic energy, petrol and foods. Eurozone headline inflation hit 8.6% in June, up from 8.1% in May. Inflation is being driven by soaring food and energy, with core inflation at 3.7% (May 3.8%)
Energy price inflation was 42% in June (39.2% in May) whilst food inflation hit 8.9% (7.5% in May). These were partially held down by VAT and duty rate cuts.
This comes despite IMF criticising inflation VAT cuts in a recent report, and has been joined by the OECD review of VAT reductions and other policy remedies.
The EU introduced new reduced EU VAT rate setting freedoms on 6th April 2022 which allows member states to use a reduced VAT rate below 5% for the first time on a controlled ranges of goods and services. Plus, extended the categories of supplies eligible for the other two reduced rates permitted below their standard rate.
- Slovenia confirms domestic gas VAT rate cut and digital newspapers in September
- Italy considers food VAT rate cuts
- Cyprus parliament votes to zero-rate VAT on petrol, energy and electricity
- Bulgaria confirms energy VAT cut extension plus zero-rating basic foods
- Ireland likely to extend VAT cut on energy till end of 2022
- Belgium extends temporary heating VAT rate cut until end of 2022
- Italy has rolled over again VAT rate cut to 5% on domestic and industrial natural gas till 30 September 2022
- UK discussing temporary VAT rate cut following fuel duty reduction
- Spain to cut domestic electricity VAT further to 5%
- Netherlands plans to cut electricity VAT to 9% progress
- Lithuania to cut VAT on food to zero from August
- Poland rolls over energy and food temporary VAT cuts till 31 October 2022
- Finland considers VAT cuts to petrol and food
- Luxembourg cuts VAT on diesel till end of 2022
- Latvia Bill to zero rate basic food stuffs from 15 July
- Ireland to extend again VAT cut to restaurants, cafes and tourism on inflation worries
- Estonia to temporarily cut VAT on domestic energy until May 2023
- Ireland gas & electricity VAT cut to 9% for 6 months as inflation hits 40-year high
- Portugal further duty cuts as wait confirmation on cut VAT on petrol to 13%
- France Presidential candidates offer petrol and energy VAT cuts
- Netherlands VAT cut on energy and duty reduction on petrol till Dec 2022
- Estonia cuts VAT on petrol and heating fuel from 30 April
- Spain has cut VAT on domestic fuel from 21% to 10% until 30 Jun 2022.
- North Macedonia cuts VAT in basic foodstuffs (0%) and petrol (10%) from March 2022. Electricity rate cut till Jun 2023
- Croatia to cut VAT on heating and basic foodstuffs from April 2022
- Turkey to cut foodstuffs VAT from 8% to 1% and electricity to 8% as inflation escalates
- Romania is reducing domestic electricity from 19% to 5% in 2022. It is also considering cutting foodstuffs VAT to 0%. A proposal to cut VAT on petrol is also being prepared for April 2022.
- Greece is reviewing a VAT cut to electricity and basics
- Lithuania is looking to cut VAT to 0% on thermal power and domestic natural gas and basic foods until start of May 2022
- Czechia Ministry of Finance reduced to 0% VAT on domestic gas and electricity in breach of the VAT Directive and waived collections for Nov and Dec 2021. Full 21% rate now applies again in 2022.
- Ukraine considering zero-rating from 20% of fuel in light of Russian invasion
- Norway whilst not cutting VAT rate, is planning direct payments against electricity bills when they reach certain levels.
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