The European Union leaves a free decision in the application of VAT to the countries of the community.

The reduced VAT rate on the goods and services chosen by the state will be determined by local governments, not by Brussels. This is the next stage of the Union tax reform announced by the European Commission.

The current provisions say that a reduced VAT rate can only be applied to 18 goods and services from a top-down list. In addition, the amount of this reduced tax can not go below the 5% threshold. This is to change from 2022.

Although the standard rate, each state will have to apply at a common level – not less than 15 percent. – but the Union will hand over the issue of reduced rates to the Member States.

The rules for selection will also change. Instead of the list of allowed products and services will be a negative list. This means that, apart from specific products and services (eg alcohol, precious metals, weapons, fuels, tobacco, electronics, household appliances, financial services or gambling), the use of a discount will be allowed.

Each country will be able to apply zero rate at will, one rate between 0 and 5 percent, two rates between 5 percent. and the standard one (in Poland it is 23% ) and common for all EU members – at least 15 percent. – standard rate.

However, in order to prevent countries from abusing zero or reduced rates, the EC proposed that from 2022 the average weighted rate should not be lower than 12%.

These solutions not only have to level the chances and organize the tax system in the EU, but also give the Member States more freedom.

Thanks to this, each country will be able to change the choice of services and goods that will be covered by relief, depending on the priorities of the economic and social policy and the state budget situation.