Reduction in VAT on gas and electricity becomes permanent from 1 April
From Saturday 1 April what had been a temporary reduction in the level of VAT levied on gas and electricity will become permanent. As one of the measures designed to help Belgian households cope with soaring energy costs, the Federal Government temporarily reduced the level of VAT levied on gas and electricity from 21% to 6%. From tomorrow this will become permanent.
In order to make up for some of the shortfall in revenue caused by cutting VAT on energy, excise duty will be levied on gas and electricity.
Previously the Federal Finance Minister Vincent Van Peterghem (Flemish Christian democrat) said that the reduction of the level of VAT levied on energy would cost the exchequer 892.95 million euro this year, while the introduction of excise duty on energy will bring in 543.91 million euro.
16.5 euro/month less per household
According to figures from the consumers’ organisation Test Aankoop an average household will pay 16.5 euro/month less for energy that would have been the case had VAT on gas and electricity remained at 21%. While the reduction in the level of VAT is good for a reduction of 38.5 euro/month in the average household’s energy bill, the introduction of excise duty will cost the average household 22 euro/month.
Furthermore, "Thanks to a protective mechanism that is built into the system, the amount saved will be greater if energy prices rise as then the level of duty levied will fall”.
The level of excise duty levied on gas will rise if the price of gas falls sharply. Those that benefit from the reduced “social tariff” won’t have to pay excise duty on their electricity and gas until 1 July.