The readiness of the executive to consider the introduction of a transitional period and a criterion regarding the maximum cost of the reduced VAT rate for the construction of housing, conveyed to the Finance Committee of the House of Representatives, Finance Minister Constantinos Petrides, warning, however, that there is a risk that the European Commission may request a refund due to the violation of the relevant Directive.
The government bill submitted to comply national legislation with the VAT directive provides for a reduced VAT rate of 5% for houses with a maximum area of 140 square meters (instead of the current 200 square meters).
At the session committee members again raised questions about the correspondence between the government and the European Commission, with Konstantinos Petridis criticising the Parliament for a law proposal that it passed unanimously in 2016, while suggesting that a DIKO MEP had denounced the government for misapplying the European VAT directive that triggered the Commission's warning letter.
"You are accusing the executive of a legislation which you voted unanimously and which you denounced to the European Commission and we come here to collect the unmentionables," he said.
At the same time, Petrides said there is a risk that the European Commission will ask for money back from the incorrect implementation of the VAT directive.
"There is a risk that they will ask for money back and this risk is something we are concerned about and it is for this that we want to respond and relatively soon and in the context of the social policy that it (the directive) sets itself," the Minister of Finance said.
Regarding the possibility of increasing the threshold of square meters for the application of the reduced rate, Petrides said it would be examined, noting that it is difficult to be accepted by the Commission.
Source: CNA
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