Reduced rate of VAT for Horses & Greyhounds

EU Commission v Ireland (C-108/11)

This case related to the application of the reduced rate of VAT of 4.8% to supplies of greyhounds and horses not intended for the preparation of foodstuffs, to the hire of horses and certain insemination services. On 14 March 2013 the ECJ published its decision.

Article 110 of the VAT Directive provides that Member States which zero-rated or applied reduced rates lower than the minimum at 1 January 1991 may continue to do so, but they must have been adopted for “clearly defined social reasons” and be “for the benefit of the final consumer”.

The Commission argued that the reduced rates were not adopted for clearly defined social reasons and were not for the benefit of the final consumer i.e. the two cumulative conditions set out in Article 110 were not satisfied. The Court held that the conditions were not fulfilled. There may be changes to such VAT rates in the imminent Finance Bill. Read the full judgment here.