Good news from Brussels: bicycles – with and without electric assistance – could become cheaper as early as 2022. Towards this end, the finance ministers of the European Union have now decided to change previously applicable regulations for the levying of VAT on selected goods and services. In this case, cyclists could be among the beneficiaries of this agreement. In future, anything that fights climate change, serves health protection or promotes the digital transformation should be available with a lower VAT rate. Bicycles are among them.
Currently, the standard VAT rate of at least 15 per cent applies in most states of the European Union. This could change to at least five per cent next year. The paper passed by the ministers even envisages exempting goods and services from VAT altogether. However, this is only an option for things that we all need to cover our basic needs. Presumably, the bicycle will hardly make it to this status in any country.
A reduction of between ten and 20 percent is realistic
At the moment, bicycles are subject to very different tax rates within the EU. They range from six percent in Belgium to 27 percent in Hungary. So, this gap could soon become much smaller. Especially since the agreement of the finance ministers includes an equal treatment directive. It states that each state can adopt exemptions and exceptions for certain goods and services which, for historical reasons, have so far only applied to individual member states. So, if, for example, the government under Viktor Orbán suddenly becomes fond of cycling, it could adopt Belgian practices and cause prices to plummet by more than 20 per cent in one fell swoop.
The fact that bicycles are included in the proposal to update the regulations comes as something of a surprise. E-bikes had been explicitly ruled out in the proposal that was put to the vote in 2018. In general, the agreement of the finance ministers is remarkable. The prerequisite for the adoption of the proposal was the unanimous thumbs-up of all EU member states. This meant that every single one of the 27 member states had a right of veto.
For the Domane+ LT 9 of the 2021 season, Trek charges 10,999 euros in Germany. With five instead of 19 percent VAT, the purchase price would drop by around 1,500 euros.
Lobbying pays off
Behind the scenes, the European Cyclists’ Federation (ECF), Confederation of the European Bicycle Industry (CONEBI) and Cycling Industries Europe (CIE) had lobbied for years for the creation of a reduced tax rate for bicycles. Accordingly, they commented optimistically on the current development.
“The inclusion of supply, rental and repair of both conventional and electric bicycles in the list of goods on which reduced VAT rates can be applied adds a powerful instrument to member states’ toolboxes for promoting cycling and can help to make cycling even more affordable for citizens,” ECF’s CEO Jill Warren stated. CONEBI’s General Manager Manuel Marsilio added: “It has been a long way since we started such an important advocacy campaign with ECF in 2018, but we finally see a tangible outcome. This legislative decision, within the reform of the VAT rates, opens up to a unique opportunity for governments in Europe to further support Cycling in very practical terms.” “This result shows once again the importance of long-term, well resourced, professional advocacy for the cycling sector at national and EU level,” says CIE’s CEO Kevin Mayne. “The work can be slow and highly technical, but the impact is potentially huge.”
States still with individual leeway
Nevertheless, it seems a little too early for the great victory jubilation. The ministers’ proposal will next go to the European Parliament. Its members now have until March 2022 to comment on it.
In some places, people are confident that the current status in this form will then come into force as a regulation. Once again, Belgium is leading the way. The government there has already passed a law that every type of bicycle will be subject to the reduced tax rate. As soon as Brussels gives the green light, this law will become effective.
Regardless of the exact extent to which the EU changes the rules for charging VAT, certain differences will remain within the EU states. Those who do enough elsewhere to compensate financially in terms of achieving jointly agreed environmental and climate goals can continue to tax bicycles beyond next year as before.
Pictures: www.stocksnap.io; www.freeimages.com
