Proposal for a Council Directive amending Directive 2006/112/EC as regards reduced rates of value added tax {SEC(2008) 2190} {SEC(2008) 2191}
Date: 2008-07-07
Institutions: European Commission
Subjects: VAT, basis of tax assessment, delivery, distributive trades, provision of services, tax exemption, tax harmonisation, tax on consumption, tax relief

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.7.2008 
COM(2008) 428 final 

2008/0143 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2006/112/EC as regards reduced rates of value added tax 

(presented by the Commission) 

{SEC(2008) 2190} 
{SEC(2008) 2191} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

1.1. 

Grounds for and objectives of the proposal 

than  standard  VAT 

Based  on  the  study  on  reduced  VAT  applied  to  goods  and  services  in  the  Member 
States  of  the  European  Union  presented  by  Copenhagen  Economics  (hereafter  "the 
CE study"), the Commission on 5 July 2007 adopted a Communication on VAT rates 
other 
(hereafter  "the  2007 
Communication"), which explores ways forward in the field of reduced VAT rates, 
as the starting point of a broad political debate in the other EU Institutions and with 
all  stakeholders.  All  relevant  views  collected  on  this  issue  will  serve  to  initiate  a 
sustainable  and  well  balanced  proposal  in  the  medium  term  on  the  future  scope  of 
VAT reduced rates. 

(COM(2007)  380) 

rates 

In  parallel  with  this  on-going  debate,  the  Commission  hereby  tables  a  limited 
legislative  proposal  amending 
the  provisions  of  Directive  2006/112/EC  of 
28.11.2006  (hereafter  "the  VAT  Directive")  relating  to  urgent  issues,  which  do  not 
require  any  substantial  additional  study  other  than  that  referred  to  in  its 
Communication and detailed in the Commission staff working document (SEC(2007) 
910).  This  proposal  should  be  regarded  as  a  first  action  concerning  reduced  VAT 
rates. 

The  Commission's  objective  is  to  ensure  equal  opportunities  for  Member  States  as 
well  as  more  transparency,  consistency  and  a  smooth  functioning  of  the  internal 
market as regards reduced VAT rates for locally supplied services including labour-
intensive  services  and  restaurant  services.  Some  technical  adaptations  are  also 
included in this proposal. 

1.2. 

General context 

The  2007  Communication  builds  on  the  need  for  simplification,  the  proper 
functioning  of  the  internal  market,  the  reduction  of  compliance  costs  and  for 
coherence. Against this background, the debate on an in-depth revision of the scope 
of reduced VAT rates at EU level has only started including a debate in the Council 
on  the  efficiency  and  effectiveness  of  reduced  rates  for  boosting  specific  policy 
objectives. Therefore, further time is still needed in order to gather all the elements to 
be  taken  into  account  as  well  as  the  input  by  the  other  EU  institutions  and 
stakeholders.  Only  on  this  basis  will  it  be  possible  to  identify  a  suitable  and 
sustainable way forward. 

Similarly, the appropriateness of allowing the application of a reduced rate to energy 
saving  materials  and  to  other  environmentally  beneficial  products  or  services 
(notably  energy  saving  and  energy  efficiency  related  services  such  as  inspections, 
energy audits and energy performance certifications) is currently being examined by 
the Commission in accordance with the request formulated by the European Council 
in March 2008. The Commission will present the results of its analysis, accompanied 
by relevant proposals and recommendations in the autumn together with proposals to 

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address  the  appropriateness  of  eliminating  reduced  rates  for  environmentally 
prejudicial products such as pesticides.  

A more in depth review of the whole structure of VAT reduced rates will be carried 
out subsequently. 

In the meantime, the Commission considers it is important to tackle the most urgent 
issues.  These  are  legal  and  political  problems  which  have  arisen  either  because  of 
divergent interpretations of the directive or because of a lack of a level playing field 
for all Member States as regards the possibility for Member States to apply reduced 
rates  in  those  areas  where  the  proper  functioning  of  the  internal  market  is  not 
affected.  In  particular,  on  the  basis  of  the  analysis  made  in  the  CE  study,  the 
Commission considers that there is room to grant more autonomy and certainty to the 
Member  States  in  setting  reduced  rates  for  certain  local  services  in  line  with  the 
efforts to improve the business environment for SMEs, which is one of the priority 
action  areas  under  the  Lisbon  strategy  for  growth  and  jobs,  and  in  particular  the 
Small Business Act.  

Therefore, this proposal essentially covers the main temporary provisions expiring at 
the end of 2010 concerning local services for which the CE study provides sufficient 
material for an impact assessment. It thus proposes permanent, updated provisions on 
the labour-intensive services listed in Annex IV of the VAT Directive which expire 
on 31 December 2010. It also proposes the addition of certain other locally supplied 
services, including restaurant services, to the current Annex III of the VAT Directive 
(list of the goods and services eligible for a reduced rate). The technical adaptations 
included in this proposal concern either legal drafting improvements, clarifications, 
updating to take account of technical progress or removal of current inconsistencies. 

1.3. 

Assessment by the Commission 

The  CE  study  concludes  that  moving  towards  a  more  uniform  VAT  rates  structure 
has  considerable  advantages  from  a  purely  economic  point  of  view.  Carefully 
targeted reduced VAT rates may, nevertheless, provide specific benefits, in particular 
in terms of economic growth: they can induce consumers to shift activities from DIY 
(do it yourself) and the "underground" economy to the formal economy. Moreover, 
when applied to locally supplied services, they are of no concern for the functioning 
of the internal market. There are also arguments to introduce reduced VAT rates in 
sectors employing many low-skilled workers in order to permanently create jobs for 
such workers.  

On this basis, the Commission concludes that there are good reasons to include local 
services  in  the  list  of  goods  and  services  eligible  for  a  reduced  VAT  rate.  It  thus 
proposes to include in Annex III all the categories of Annex IV, which by virtue of 
Article 107 are local and not likely to cause distortion of competition, and to extend 
the  scope  of  reduced  VAT  rates  to  some  other  services  which  are  local  because  of 
their basic characteristics. The place of supply rules ensure their taxation at the place 
of  consumption,  they  cannot  be  supplied  from  a  remote  location,  they  are  largely 
directed  to  the  local  market  of  final  consumers  and  the  supplier  and  customer  are 
located in a geographically limited area. . The proposed changes to the Directive will 
also make  it possible  for  Member  States to apply reduced VAT rates to renovation 
and repair work aiming at increased energy-saving and efficiency. 

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1.4. 

Existing provisions in the area of the proposal 

The exercise involves changes to Title VIII (Rates) of the VAT Directive.  

1.5. 

Consistency with the other policies and objectives of the Union 

The current proposal is fully in line with established EU VAT policy as well as other 
policies  and  objectives  of  the  EU.  In  particular  it  aims  at  ensuring  the  proper 
functioning  of  the  Internal  Market.  This  proposal  also  forms  part  of  the  Small 
business  Act  adopted  on  25  June  2008.  Although  it  is  not  aimed  exclusively  at 
SMEs, it will have a positive effect for them, since the sectors at issue include many 
SMEs and the proposal will give legal certainty on the continued application of VAT 
reduced rates in these sectors. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

2.1. 

Consultation of interested parties 

A  public  consultation  of  all  interested  parties  was  launched.  Public  and  businesses 
were mainly targeted but some national authorities also responded. 

In general, the consultation did not reveal arguments which are not already covered 
by or which are relevant for the purposes of the impact assessment. Moreover, there 
were  almost  no  relevant  data  assessing  the  positive  or  negative  effects  of  reducing 
VAT rates for the various sectors for which a reduced rate is claimed. The majority 
of  replies  support  the  Commission's  analysis  in  its  consultation  paper  and  the 
addition  to  Annex  III  of  locally  supplied  services,  including  the  labour-intensive 
services  currently  covered  by  Annex  IV,  restaurants,  housing  and  some  potential 
technical adaptations. They also largely support the 2 step approach envisaged by the 
Commission, consisting in dealing quickly with the urgent issues, and to continue the 
broad  debate  launched  in  2007  on  a  more  global  and  sustainable  solution  for  the 
future concerning the scope of VAT reduced rates. A detailed summary report of the 
results of the public consultation will be published as soon as possible. 

This  consultation  was  conducted  over  the  internet  from  11/03/2008  to  12/05/2008. 
The Commission received more than 550 responses. The results will be available on 
http://ec.europa.eu/taxation_customs/common/consultations/tax/article_4850_en.htm 

2.2. 

Collection and use of expertise 

There  was  no  need  for  additional  external  expertise.  The  study  conducted  by 
Copenhagen Economics on the reduced rates is a sufficient basis. 

2.3. 

Impact assessment 

This proposal is a priority initiative in the 2008 Commission Legislative and Work 
Programme.  The  need  to  present  a  proposal  relating  to  urgent  issues  called  for  a 
proportionate  impact  assessment  strictly  focusing  on  these  issues.  The  problems 
identified  with  the  current  rules  mainly  relate  to  political  and  legal  constraints  and 
the policy options set out in the impact assessment reflect this situation.  

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The  following  policy  options  were  assessed  from  an  economic,  social  and 
environmental perspective: 

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(1) 

No policy change. 

The current provisions including the option for Member States to apply 
(2) 
reduced rates to certain labour-intensive services (listed in Annex IV) is made 
permanent and available for all of them. 

The  list  of  these  labour-intensive  services  eligible  for  reduced  rates  is 
(3) 
extended  to  a  number  of  other  similar  (small)  locally  supplied  services  for 
private households only. 

(4) 
The  list  of  these  labour-intensive  services  is  extended  to  a  number  of 
similar  (small)  services  for  some  other  non-commercial  customers,  such  as 
repair,  maintenance  and  cleaning  of  places  of  worship,  cultural  heritage  and 
historical monuments 

(5)  Member  States  have  the  option  to  apply  reduced  rates  to  restaurant 
services. 

(6)  Member  States  can  also  apply  reduced  rates  to  the  construction  and 
(significant) alteration of private dwellings and to the supply thereof.  

(7)  Member  States  can  also  apply  reduced  rates  to  the  construction  and 
significant renovation and alteration of some  non-commercial buildings (such 
as  places  of  worship,  cultural  heritage  and  historical  monuments)  and  to  the 
supply thereof. 

The  impact  assessment  report  (SEC(2008)  2190)  and  its  executive  summary 
(SEC(2008) 2191) is accessible on the website of DG Taxation and Customs Union. 
In summary and without taking account of the budgetary impacts on Member States, 
which are for them to assess in the first place, overall preference goes to including 
options 2, 3, 5 and 6 in the proposal. 

The  Commission  carried  out  an  impact  assessment  listed  in  the  Work  Programme, 
whose 
on 
http://ec.europa.eu/taxation_customs/taxation/vat/key_documents/legislation_propos
ed/index_en.htm. 

accessible 

report 

will 

be 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Summary of the proposed action 

By amending the current Annex III of the VAT Directive, this proposal provides for 
a  general  possibility  for  all  Member  States  to  apply  reduced  VAT  rates  to  certain 
locally supplied services, including labour-intensive services and restaurant services. 
Some technical adaptations are also included in this proposal.  

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3.2. 

Legal basis 

Article 93 of the Treaty. 

3.3. 

Subsidiarity principle 

The  subsidiarity  principle  applies  insofar  as  the  proposal  does  not  fall  under  the 
exclusive  competence  of  the  Community.  The  objectives  of  the  proposal  cannot  be 
sufficiently achieved by the Member States for the following reasons. 

The Community has already laid down harmonised provisions on the application of 
VAT  reduced  rates,  namely  in  the  VAT  Directive.  These  provisions  may  only  be 
amended or extended by a Community act and the legislations of the Member States 
cannot deviate from the harmonised rules. 

For the reasons outlined above, only Community action can achieve the objectives of 
the  proposal  and  ensure  equal  treatment  of  citizens  in  the  European  Union.  The 
proposal therefore complies with the subsidiarity principle. 

3.4. 

Proportionality principle 

The Proposal complies with the proportionality principle for the following reasons: 

The present Proposal extends the scope of reduced rates to some new categories. It 
maintains  the  current  option  for  Member  States  to  apply  reduced  VAT  rates.  It 
therefore imposes no obligation. 

Given  its  limited  scope,  the  measure  is  proportionate  to  the  aim  pursued.  The 
directive  involves  no  financial  cost  to  the  Community.  Although  reduced  rates  of 
VAT may involve a reduction in revenue for States, they place no financial burden 
on  economic  operators,  and  consumers  should,  in  principle,  benefit  from  the 
continued reduction in rates, in so far as this will be reflected in final prices.  

3.5. 

Choice of instruments 

Proposed instrument: Directive. 

Other means would not be adequate for the following reason:  

This Proposal modifies provisions concerning reduced VAT rates already enacted in 
a Directive. 

4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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5. 

ADDITIONAL INFORMATION 

5.1. 

Correlation table 

The  Member  States  are  required  to  communicate  to  the  Commission  the  text  of 
national  provisions  transposing  the  Directive  as  well  as  a  correlation  table  between 
those provisions and this Directive. 

5.2. 

Review/revision/sunset clause 

The proposal does not include a sunset clause. 

5.3. 

Detailed explanation of the proposal 

Consistent  with  the  positive  conclusions  of  the  CE  study  on  the  usefulness  in 
applying  reduced  rates  to  locally  supplied  services  where  such  measures  are  very 
well targeted and specific market conditions are fulfilled, the Commission proposes 
to  permanently  incorporate  locally  supplied  services  including  labour-intensive 
services,  restaurant  and  services  related  to  the  housing  sector  and  some  other 
immovable  properties  into  Annex III.  Some  other  legal  improvements  are  also 
included. 

Ad Article 1: 

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Article 101: since the Commission has already presented an assessment 

(1) 
report as requested, this provision is obsolete and it is therefore deleted. 

(2) 
Article 102(1): improvement to the wording of this provision is made in 
order to take into account technological evolution and adapt to the terminology 
used in other EU legislation. 

Chapter 3 of Title VIII (Articles 106 to 108) (labour-intensive services): 
(3) 
The  provisions  set  out  in  this  Chapter  concern  the  experimental  temporary 
measure  (until  end  of  2010)  of  the  application  of  reduced  rates  on  labour-
intensive  services.  These  provisions  will  become  obsolete  once  these  are 
permanently  incorporated  into  Annex  III  (new  categories  10a  and  21  to  23). 
This Chapter is therefore deleted. 

(4) to (11) Article 114(1), second subparagraph, Articles 115, 116, 117(1), 123, 
125(2),  128(2)  and  (4)  and  129(1)  and  (2):  Given  the  incorporation  of 
restaurant  services  and  housing  in  Annex  III  (categories 10  and  10a  for  the 
housing  and  category 12a  for  restaurant  services),  they  no  longer  need  to  be 
included in the derogations provided for in these provisions.  

(12)  Annex III:  This  Annex  has  been  revised  to  integrate  locally  supplied 
services  including  the  labour-intensive  services  set  out  in  Annex IV  and 
restaurant services for which the 2007 Communication concludes that there is 
no potential detriment to the smooth functioning of the internal market. Some 
adaptations have also been made mainly in the interests of rationalisation and 
simplification  through  the  necessary  corrections  and  clarifications  as  well  as 
some technical drafting improvements. The amendments made are as follows : 

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Technical drafting adaptations: 

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Category 3 (pharmaceutical products): Precise and slightly enlarge 
that  category  in  order  to  clearly  cover  both  feminine  sanitary 
protection and children's nappies by using a generic wording. 

Category 4  (equipment  for  the  disabled):  Updating  to  technical 
progress.  Current  category 4  covers  only  medical  equipment,  aids 
and  other  appliances  normally  intended  to  alleviate  or  treat 
disability. The concept of disability is broad enough to encompass 
serious or chronic illness as well. However, equipment or apparatus 
specially  designed  or  adapted  for  the  disabled  (e.g.,  Braille 
keyboards,  specially  adapted  cars,  etc.)  are  not  eligible  for  the 
reduced  rate  even  though  they  reply  to  the  same  needs.  The 
Commission therefore proposes including them in category 4. 

Category 6 (books, etc.): The current wording covers only books on 
paper support. For reason of neutrality, an extension is necessary in 
order to also cover books that are on CD, CD-ROMs or any similar 
physical  medium 
the  same 
information  content  as  printed  books.  Thus,  only  recordings  that 
fundamentally reproduce the written text in a book are covered. A 
recording  that  includes  supplementary  material  such  as  games, 
search functions, links to other material and similar, apart from the 
text read aloud, continues to be subject to the normal VAT rate.  

that  predominantly 

reproduce 

Category  8  (reception  of  radio  and  television  broadcasting 
services):  these  services  are  taxable  supplies,  not  the  reception 
thereof: these words have consequently been deleted. 

Category 9 (supply of services by writers, etc.): As royalties are not 
services  for  VAT  purposes,  but  the  consideration  for  certain 
services, the text has been rephrased. 

Category 16  (supply  of  services  by  undertakers,  etc.):  In  order  to 
separate  the  object  of  the  definition  of  the  reduced  rate  from  the 
quality of the supplier it is proposed to link it to the kind of service 
provided and to rather refer to funeral undertaking services.  

Category 18  (street  cleaning,  waste  treatment,  etc.):  The  scope  of 
this category is too narrowly defined with the result that services of 
a  very  similar  nature  are  treated  differently  as  regards  rates.  For 
instance,  whereas  street  cleaning  and  household  refuse  collection 
are  eligible  for  the  reduced  rate,  there  is  no  reference  to  sewer 
services. Likewise, the reduced rate may apply to waste treatment, 
but not to recycling. It is proposed to remove these inconsistencies. 
The reference to the bodies in Article 13 has been eliminated as it 
is redundant to restate what is already regulated in that provision. 

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Extension of an existing category 

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– 

Category 10 is modified and Category 10a is added to cover more 
broadly  the  housing  sector.  This  amendment  consists  of  a 
rationalisation  and  extension  of  Member  States'  option  to  apply 
reduced  rates  in  the  housing  sector  by  removing  the  limitation  to 
housing  "provided  as  part  of  a  social  policy"  and  adding  repair, 
maintenance and cleaning of housing (currently categories 2 and 3 
of  Annex IV).  This  possibility  of  applying  a  reduced  VAT  rate  is 
also  extended  to  services  carried  out  on  places  of  worship 
recognised by the Member State concerned and on cultural heritage 
and historical monuments, given their genuine cultural importance. 
These  changes  are  unlikely  to  create  distortion  of  competition  to 
the  internal  market:  the  place  of  taxation  of  services  relating  to 
immovable  property  is  always  at  the  place  where  the  property  is 
located.  All  providers  of  property-related  services  are  therefore 
subject  to  the  same  conditions  as  regards  rates  regardless  of  the 
Member State in which they are established. 

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New categories 

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Category 12a  (restaurant  and  catering  services):  This  addition  is 
made  to  offer  an  equal  treatment  to  all  Member  States  but  also 
because  the  supply  of  restaurant  and  catering  services  fulfil  the 
same criteria as the other locally supplied services added. To assure 
consistency  with  category  1  concerning  foodstuffs,  the  supply  of 
alcoholic  beverages  is,  however,  excluded.  As  derogation  to  the 
principle "a single rate for a single transaction" that should apply in 
case of restaurant services, the exclusion of these beverages seems 
expedient  to  avoid  a  standard  VAT  rate  applied  to  alcoholic 
beverages  bought  as  such  and  a  reduced  VAT  rate  applied  when 
they make up part of a restaurant service. The nature of the services 
concerned  and  the  rules  applicable  to  the  place  of  taxation  mean 
that the risk of relocation is minimal. Moreover, accommodation in 
hotels and similar establishments is already included in Annex III. 
The  addition  of  restaurant  and  catering  services  can  therefore  be 
considered  to  be  a  justified  rationalisation  and  provides  equal 
opportunities to all Member States. 

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Categories 19  to  23  (locally  supplied  services):  The  insertion  of 
services other than labour-intensive services but of similar nature is 
necessary for reasons of coherence and equal treatment. To ensure 
legal  certainty  it  is,  however,  appropriate  to  list  the  services 
concerned. 

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(13)  Annex IV  (labour-intensive  services):  With  the  deletion  of  Chapter 3  of 
Title VIII  (Articles 106  to  108),  this  Annex  also  needs  to  be  deleted.  The 
substance of its provisions is now covered by Annex III. 

Ad Articles 2 to 4: 

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Articles 2, 3 and 4: These are final provisions. 

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2008/0143 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE  

amending Directive 2006/112/EC as regards reduced rates of value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
93 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the European Economic and Social Committee3, 

Whereas: 

(1) 

(2) 

Council  Directive  2006/112/EC  of  28 November  2006  on  the  common  system  of 
valued added tax4 authorises Member States to apply one or two reduced rates which 
may  not  be  lower  than  5%  and  are  applicable  only  to  a  restrictive  list  of  supplies  of 
goods and services. 

In its Communication on VAT rates other than standard VAT rates5 presented to the 
Council and the European Parliament in 2007, the Commission considered that a new 
legal  framework  for  reduced  value  added  tax  (VAT)  rates  should  lead  to  the 
rationalization  and  simplification  of  the  present  system,  without  prejudice  to  the 
possibility for more flexibility to be given to Member States to adopt reduced rates, in 
particular  to  locally  supplied  services.  In  response  to  this  Communication,  a  broad 
debate  was  launched  in  the  Council,  the  European  Parliament  and  with  other 
stakeholders. 

(3)  While this debate is yet to be concluded, there is a need to already address some urgent 
and important issues in order to ensure equal opportunities for Member States as well 
as more transparency, consistency and a smooth functioning of the internal market. To 
avoid prejudging the outcome of the ongoing debate, the action taken should however 
be limited in scope. 

1 
2 
3 
4 
5 

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ L 347, 11.12.2006, p. 1. Directive last amended by Directive 2008/8/EC (OJ L 44, 20.2.2008, p. 11). 
COM(2007) 380 final of 5 July 2007 

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(4) 

(5) 

(6) 

(7) 

In  that  Communication,  it  was  concluded  that  different  VAT  rates  applied  to  locally 
supplied  services  pose  no  real  detriment  to  the  smooth  functioning  of  the  internal 
market. It is therefore appropriate to allow all Member States the possibility to apply 
reduced  VAT  rates  to  services  such  as  labour-intensive  services  covered  by  the 
temporary provisions applicable until the end of 2010, services related to the housing 
sector  and  to  the  personal  care  and  restaurant  services.  These  changes  will  make  it 
possible for Member States to apply reduced VAT rates to renovation and repair work 
aiming at increased energy-saving and efficiency. 

As a general principle, a single rate is applied for a single transaction. Since alcoholic 
beverages  are  already  excluded  from  the  category  of  foodstuffs,  allowing  reduced 
VAT  rates  for  alcoholic  beverages  under  the  coverage  of  restaurant  and  catering 
services would create inconsistencies and would offer possibilities of circumvention. It 
is therefore appropriate to exclude such beverages from that category. 

It is necessary to include technical adaptations in order to clarify, update to technical 
progress or remove current inconsistencies. In particular, these adaptations should give 
the  same  possibility  to  apply  a  reduced  VAT  rate  to  all  absorbent  hygiene  products 
(including baby nappies) and to audio books, CD's, CD-ROMs or any physical support 
that predominantly reproduce the same information content as printed books. 

Certain provisions related to derogations have been included in the list of supplies of 
goods and services to which a reduced rate may be applied and are now obsolete. They 
should therefore be deleted. 

(8) 

Directive 2006/112/EC should therefore be amended accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Directive 2006/112/EC is amended as follows: 

Article 1 

(1) 

(2) 

(3) 

(4) 

Article 101 is deleted; 

in Article 102, the first paragraph is replaced by the following: 

"Member States may apply a reduced rate to the supply of natural gas, electricity and 
heat or cooling supplied through heating or cooling networks, provided that no risk 
of distortion of competition thereby arises."; 

Chapter 3 of Title VIII is deleted; 

in Article 114(1), the second subparagraph is replaced by the following: 

"The Member States referred to in the first subparagraph may also apply such a rate 
to children's clothing and children's footwear."; 

(5) 

Article 115 is replaced by the following: 

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"Article 115 

Member States which, at 1 January 1991, were applying a reduced rate to children's 
clothing  or  children's  footwear  may  continue  to  apply  such  a  rate  to  the  supply  of 
those goods or services."; 

(6) 

(7) 

(8) 

(9) 

Article 116 is deleted; 

in Article 117, paragraph 1 is deleted; 

Article 123 is deleted; 

in Article 125, paragraph 2 is deleted; 

(10) 

in Article 128, paragraphs 2, 3 and 4 are deleted; 

(11) 

Article 129 is deleted; 

(12) 

Annex III is amended in accordance with the Annex to this Directive; 

(13) 

Annex IV is deleted. 

Article 2 

Member  States  shall  forthwith  communicate  to  the  Commission  the  text  of  the  laws, 
regulations and administrative provisions they adopt in the field covered by this Directive and 
a correlation table between those provisions and this Directive. 

When Member States adopt those provisions, they shall contain a reference to this Directive 
or be accompanied by such a reference on the occasion of their official publication. Member 
States shall determine how such reference is to be made. 

This Directive shall enter into force on the 1 January 2011. 

Article 3 

Article 4 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the Council 
The President 

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ANNEX  

Annex III to Directive 2006/112/EC is amended as follows: 

(1) 

Points (3) and (4) are replaced by the following: 

"(3)  pharmaceutical products of a kind normally used for health care, prevention of 
illnesses  and  as  treatment  for  medical  and  veterinary  purposes,  including 
products used for contraception and absorbent hygiene products; 

(4)  medical equipment, aids and other appliances normally intended to alleviate or 
treat disability, for the exclusive personal benefit of the disabled, and apparatus 
and electrical, electronic or other equipment and means of transport, specially 
designed  or  adapted  for  the  disabled  as  well  as  the  leasing  or  hiring  and  the 
repair of such goods;" 

(2) 

The following point (4a) is inserted: 

"(4a) children's car seats;" 

(3) 

Point (6) is replaced by the following: 

"(6)  supply,  including  on  loan  by  libraries,  of  books  (including  brochures,  leaflets 
and  similar  printed  matter,  children's  picture,  drawing  or  colouring  books, 
music printed or in manuscript form, maps and hydrographic or similar charts, 
as  well  as  audio  books,  CD,  CD-ROMs  or  any  similar  physical  support  that 
predominantly  reproduce  the  same  information  content  as  printed  books), 
newspapers  and  periodicals,  other  than  material  wholly  or  predominantly 
devoted to advertising;"  

(4) 

Points (8), (9) and (10) are replaced by the following: 

"(8)  radio and television broadcasting services; 

(9) 

supply  of  services  by  writers,  composers  and  performing  artists,  including 
those remunerated by means of the royalties due to them; 

(10)  supply and construction of housing;" 

(5) 

The following point (10a) is inserted: 

"(10a) 

supply  of  services  consisting  in  the  renovation,  repair,  alteration, 
maintenance and cleaning of housing and of places of worship and of cultural 
heritage  and  historical  monuments  recognised  by 
the  Member  State 
concerned;" 

(6) 

The following point (12a) is inserted: 

"(12a) 

supply  of  restaurant  and  catering  services  excluding  the  supply  of 

alcoholic beverages;" 

(7) 

Points (16), (17) and (18) are replaced by the following: 

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"(16) supply of funeral undertaking services or cremation services, and the supply of 

goods related thereto; 

(17)  supply  of  medical  and  dental  care  and  thermal  treatment  in  so  far  as  those 

services are not exempt pursuant to points (b) to (e) of Article 132(1); 

(18)  supply of services provided in connection with street cleaning, purification and 
recycling  of  waste  water,  sewage,  refuse  collection  and  waste  treatment,  or 
waste recycling and services leading to reuse;" 

(8) 

The following points (19) to (23) are added: 

"(19) supply of gardening or landscaping services and maintenance of gardens; 

(20)  minor  repair  of  movable  tangible  property  including  bicycles  and  tricycles  of 

all types but excluding all other means of transport; 

(21)  cleaning and maintenance services of movable tangible property; 

(22)  supply  of  domestic  care  services,  such  as  home  help  and  care  of  the  young, 

elderly, sick or disabled; 

(23)  personal  care  of  the  kind  provided  in  hairdressing  salons  and  personal 

grooming establishments." 

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