Tax decreaseEndedVAT and consumption taxesNational

Reduced 5.5% VAT rate on home improvement work and home help services made permanent

Article 24 of the 2004 Finance Act removes the 31 December 2003 deadline for applying the reduced 5.5% VAT rate to improvement, conversion, fitting-out and maintenance work on dwellings completed more than two years earlier (Article 279-0 bis of the General Tax Code), to services provided by approved home help businesses (Article 279(i)) and to maintenance work on social housing. Its application depends on agreement among Member States to amend Annex H of Directive 77/388/EEC or to extend the authorisation granted to France.

Measure originators

InitiatorGVT

Alain Lambert

Gouvernement

InitiatorGVT

Francis Mer

Gouvernement

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European origin

Directive/Regulation

Impact on public finances

Costs €3.6bn/yrtotal cost of the scheme · 2004 estimate · State

Source of the estimate: Rapport général n° 73 (2003-2004) de la commission des finances du Sénat, tome II, article 12 (Indirect official figure)

A positive amount is revenue or savings for public finances; a negative amount is a cost or lost revenue.

Effective date

1 January 2004

Measure impact

Households having work done in a dwelling more than two years old or using an approved home help business keep paying 5.5% VAT instead of the standard rate.