Spain Will Defend Reduced VAT Rates After Court Case, Saenz Says

Spain will defend its value-added tax rates after the EU’s highest court ruled it violated European Union rules by granting reduced levels on too-wide a range of health-care products.

“Not only the government has no plan to raise taxes, but it is seeing in coordination with the European Commission how it can succeed in explaining the Spanish case,” Deputy Prime Minister Soraya Saenz de Santamaria told reporters in Madrid today.

The government will explain the rates it applies to some products are different to those applied in other European Union countries following a recent European court ruling, she said.

The European Commission, the EU’s executive agency, sued Spain in 2011 for violating the law by granting reduced rates of VAT to medical equipment for general use and for equipment used to alleviate animals’ physical disabilities.

“Spain applies a reduced rate to a broader range of goods than provided for” under VAT rules “in the field of pharmaceutical products and medical equipment,” the EU Court of Justice said in a final ruling on Jan. 17.

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