Belgium to make reduced 6% VAT for gas and electricity 'permanent'

Belgium to make reduced 6% VAT for gas and electricity 'permanent'
Credit: Belga

Belgium's reduced VAT of 6% on gas and electricity will remain in place, but part of that price cut could be offset by higher excise duties if energy prices fall again, the Federal Government agreed on Monday.

In mid-June, the Federal Government extended the measures it took in March to curb the high energy prices until the end of the year, meaning that the VAT rate for gas and electricity remained at 6% (instead of 21%). Now, the ministers agreed to keep it that way "permanently," announced Federal Social Affairs Minister Frank Vandenbroucke.

"Everyone is convinced that reinstating a 21% tariff now would be blind and unjust," Vandenbroucke said on Flemish radio on Monday. "In its place will be a system of excise taxes, which works more fairly."

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In practice, this means that some of the benefits of the reduced VAT rate will be set off via excise duties from April when energy prices are expected to decrease again due to Belgium's so-called 'cliquet system.' This system already exists at the pump for motor fuel, and means that excise duties rise when energy prices are lower and they fall when prices go up.

More specific details for the VAT rates on gas and electricity will be announced next Tuesday, during Prime Minister Alexander De Croo's policy statement.

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