EU VAT Hearing

On July 7th 2008 The European Commission made a proposal to change the VAT Directive 2006/112/EC. The proposed change will expand the member states possibilities for applying a low(er) VAT rate for labour-intensive services, including – as a new thing - restaurant services. This means that the inclusion of the attractions in the lower VAT scheme will be continued.

As a starting point, goods and services subject to VAT are normally subject to a rate of at least 15%. The Member States may (as it is optional to the member states) apply reduced rates of not less than 5% to goods and services set out in a restricted list.

On this list are admissions to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events, thereby giving the member states the opportunity to apply a lower VAT-rate on these services. This list has now been expanded with restaurant services.

On average the membership countries applies a VAT on admissions to commercial visitor attractions of 10% - but with great variations from 4,5% in Greece to 25,0% in Denmark.

It is of outmost importance to the attractions industry, that the inclusion of the attractions in low VAT-bracket-scheme will be maintained. This is why IAAPA Europe has  communicated the following to the European Commission:

- The amusement park- & attractions industry is a very labor-intensive industry, employing more than 100.000 people in the 27 membership countries, fitting perfectly the primary aim of the reduced VAT scheme, namely job-creation. 

- The European attractions industry employs and train many low-skilled workers with little or no education, thereby supporting an important social mission.

- Amusement parks and attractions are to a large degree preserving a rich, historical and cultural heritage as well as attending contemporary popular culture.

- Amusement parks and attractions very often work as ‘locomotives’ of the local and regionaltourism development, driving business for other parts for the tourism sector.

- The total European revenue of amusement parks alone sums up to €3.0 Billion - however the total spending related to attractions, including secondary output, represents a substantial part of the European tourism earnings.

- With more and more countries offering free entrance to museums and science centers, thecompetition between public & commercial attractions would be even more unequal, if commercial attractions are deprived the low VAT-rate opportunity.

- This is further fueled by attractions having a very high price sensitivity and being subject to vast international competition.

- Studies show that reduced VAT-rates in the tourism sector has a tremendously positive impact on investment and growth, and the lost VAT receipts are more than offset by indirect gains from widening the tax base, savings in social security payments, etc.

A detailed summary report of the results of the public consultation will soon be published. A more extensive revision of the VAT directive is expected to take place within the coming years. It is in this connection expected that reduced VAT rates will be introduced on certain areas for environmental purposes.