The President has signed the regulation on counteracting the consequences of COVID-19, whose provisions maintain the currently applicable VAT rates of 23% and 8%. For how long?
The President has signed the Act amending several acts for the purposes of counteracting the socio-economic effects of COVID-19 which aims to “stabilise the state budget and make it possible to finance essential public tasks related to the implementation of government policy” according to a statement from the Ministry of Finance. One of the key provisions is to maintain the current VAT rates of 23% and 8%. Not indefinitely, though.
Conditions for going back to VAT rates of 22% and 7%
The 22% and 7% rates will be reinstated in the year following the year during which the following two conditions are jointly met:
- application of the stabilising expenditure rule in its standard version (article 112aa of the Public Finance Act), and
- reaching the following thresholds for two indicators: (1) net government debt of no more than 43% of gross domestic product; (2) sum of annual differences between nominal to real gross domestic product and the level of the medium-term budgetary objective of no less than 6%.