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Reduced rate is illegal

22 April 2013
Issue: 4399 / Categories: Tax cases , VAT

European Commission v Ireland, ECJ

The European Commission (EC) advised Ireland in October 2007 that it contravened the Principal VAT Directive by levying the reduced VAT rate of 4.8% to supplies of greyhounds and horses not normally intended for the preparation of foodstuffs the hire of horses and mounting services in stud farms.

Ireland disputed the EC’s contention; the commission applied to the Court of Justice of the European Union (ECJ) for a ruling.

The commission said the reduced rates had been applied to supplies since 1 January 1991 but they did not satisfy the conditions required under the second paragraph of article 110 of the VAT directive – which were that the reduced rates should be adopted for clearly defined social reasons and for the benefit of the final consumer.

The ECJ said the measures had been adopted for mainly economic reasons which led the court to conclude that the...

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