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The VAT treatment of the social housing sector

Housing Europe responds to the public consultation

Brussels, 20 March 2017 | Published in Economy

Following the exchange within the Working Committees, Housing Europe has filed its response to the public consultation on the reform of VAT rates.

The European Federation for Public, Cooperative and Social Housing has asked to maintain the current system, adding the following:

Reduced VAT rates are applied to housing according the directive 2006/112 (annex III). The VAT treatment of the social housing sector is related to the economic and financial conditions of the good accomplishment of general interest tasks defined by public authorities. It is closely linked to funding mechanisms and supports the public provision of social housing.It constitutes in itself a public aid without any distortion of competition.

Housing Europe supports the European Commission proposal to maintain existing reduced rates, since any removal of reduced rates,in the context of reduced public budget, will affect the financing of social housing activities. Single rate volatility itself is a negative factor on long term investments, such as those carried out in the social housing sector. Housing Europe is therefore in favour on maintaining a system where housing as part of social policy is clearly identified as an area where Member States can apply a reduced VAT rate.