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EU blocks UK VAT break on energy-saving measures

  • VAT
  • 05 June 2015 | Richard Asquith

EU blocks UK VAT break on energy-saving measures

The European Court of Justice today held that the UK would have to raise VAT on the supply and install of a range of household energy saving measures from 5% to 20% with immediate effect. The court case had been brought by the European Commission.

The UK measures subject to the reduced VAT rate included: installation of solar panels; insulation for roofs and walls; and energy-efficient hot water systems for homes.

Under the EU VAT Directive, member states may vary VAT rates on certain products. However, the Directive limits these derogations tightly, and energy-saving measures are not included.

This may be a blow to the government’s Green Deal offer, which offers domestic energy-saving improvement packages. But the UK is bound by the Directive and the ECJ’s ruling.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.