Tampon tax: EU loosens VAT rulings

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The zero rating of VAT applied to women’s sanitary products grabbed the headlines following the Budget. As well as being a social victory, it also demonstrates the European commission’s flexibility when it comes to reducing VAT on other products.

The agreement reached by 28 EU leaders on the European council in March allowed the government increased flexibility to reduce rates of VAT, and scrap the unpopular 5% levy applied to sanitary products.

As detailed in the Finance Bill, the exchequer expects this measure to decrease receipts by £15m. “The question though is what difference to the market place is going to arise from a removal of the 5% turnover to a 0% rate,” said Graham Elliot, Director at VAT specialists City of Cambridge consultancy. “There is no legal requirement of the retailers of this product to reduce their price by the same amount.”

So while the so called 'tampon tax' on its own may be seen as a political stunt, Elliot says it indicates a major “shift in the general views of the European union in favour of countries being able to nominate certain supplies that will go down to the 0% rate”.  

Up until these changes, Elliot says, the view has been that the European Union has been trying to level the rates to create a broader tax base with fewer exceptions and exemptions. But the EU permitting zero rating on sanitary products does suggest that it is open to going in the opposite direction.

“Whether that is an opportunity for products besides woman sanitary products, or whether there is going to be some quid pro quo that causes us a bigger problem, remains to be seen,” Elliot said.

Overturn EU's VAT demands

The new EU VAT agreement could open the door to overturn other EU VAT demands, like the European court of Justice’s ruling that reducing energy saving materials was in breach of EU laws.

The government had originally earmarked March’s Budget to announce the VAT increase on energy saving materials such as solar panels from 5% to 20%, and planned on implementing the levy from August, as discussed in its consultation. Greenpeace estimated that had the solar panel levy been applied, installing the typical panels as seen on rooftops would have increased the price from £6,000 to £7,000.

However, the Finance Bill didn’t include the expected EU VAT ruling on energy saving materials.

Pressurised by a coalition of Labour, SNP and a rebellion of Eurosceptic Conservative MPs, the government has since made a U-turn in the days following the Budget on their plans to apply the European Union’s ruling, and accepted Labour’s amendment to hold off from imposing the VAT hike on energy products.

While no formal statement has been released, the treasury said in an email: “installation of all energy saving materials including solar panels, wind turbines and water turbines will also continue to benefit from the current, reduced rates of VAT”.

Whether the VAT increase on solar panels has been delayed or scrapped altogether remains to be seen, but if the government are willing to defy the European court of Justice, maybe the ramifications of the zero rating on sanitary products could actually go beyond this one product.

About Richard Hattersley

Richard Hattersley

Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.


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01st Apr 2016 20:12

What a shocking title for this article

Chauvinism or misogyny

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02nd Apr 2016 10:53

I don't understand

carnmores wrote:

Chauvinism or misogyny

I'm not sure what you mean, Carnmores. I'm being serious. The formula for writing a news headline involves a verb. And given the context of the article: "Loosens" is appropriate. 

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01st Apr 2016 23:18

Loosens what?

Oh, the VAT.  I thought.....Oh, nevermind!

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02nd Apr 2016 15:16

If you don't understand

Then its pointless explaining as its crystal clear

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02nd Apr 2016 21:50


Speaking as someone who was there when this headline was written, I can tell you that you are mistaken. Any interpretations are yours, and you are, of course, welcome to them. But I think it unfair to cast aspersions on the writer when it honestly was not his intention. 

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By chatman
04th Apr 2016 14:40

Logical Fallacy

carnmores wrote:
If you don't understand. Then its pointless explaining as its crystal clear

Surely someone's failure to understand should be a prime reason for explaining. The logical conclusion would be that it is only worth explaining something to someone if they already understand it!

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02nd Apr 2016 22:05

if it wasnt you how can you be sure
However I am often saying we should be more robust so someone should apologise and we can all move on or Hattersley should consider his position if he wrote it, over to you.

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02nd Apr 2016 22:13

5th January 2014
In the name of the mother?

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02nd Apr 2016 23:19


"Forgive them for they do not know what they are doing."

Or maybe they do.  This is a "pay per click" business after all.  Like the pointless storm they managed to stir up over that ICAS letter.

You know what they say.  Those who can't do, teach.

Those who can't be journalists write SEO content!


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By mabzden
03rd Apr 2016 12:28

Utility costs next?

I have to say I could read the title 100 times and not see anything wrong with it.

Maybe this just goes to show there are a small number of Aweb users who love to moan rather than contribute to an informed debate. So we should just ignore those people and move on...

It's good if VAT is scrapped for women's sanitary products - it always seemed unfair. But what seems much more important is the same 5% rate of VAT applies to utility costs.

Given that we have 2 million households in fuel povery, and there are many people in the UK who have to choose between heating their homes and buying food, wouldn't it be better to campaign to reduce VAT on gas and electricity?

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03rd Apr 2016 12:22

Nothing wrong with title
You shouldn't be drinking whilst on that high horse. You might injure yourself.

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04th Apr 2016 11:56

If you can believe your eyes and ears . . .

... it also demonstrates the European commission’s flexibility  ...

How many years of argumentation did it take?
All it demonstrates is a 'too little too late' propaganda nod to Brexiteers..
And it seems to have beguiled at least one journalist

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04th Apr 2016 12:04

As with anything that looks like good news from the EU

I think you will find that there are strings attached to this...

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By keithas
05th Apr 2016 13:25

Watch out

The Minion wrote:

I think you will find that there are strings attached to this...


Carnmores will be very cross with you.

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04th Apr 2016 13:03

Every silver lining has a cloud attached...

When, last year, this subject was mentioned in the Autumn Review George announced that a whole plethora of Women's Charities would benefit because the 5% was going to be diverted to them and many of them have benefited from the diversion of this tax - but what will they receive now that the rate goes to 0%?

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