The purchase, repair and rental of bicycles may carry a reduced VAT in the EU | Environment

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A man fixes a bicycle in a Madrid workshop.
A man fixes a bicycle in a Madrid workshop.VICTOR SAINZ

Bicycles (electric or not), repair shops and the rental of these vehicles may have a reduced VAT in the countries of the European Union that so decide. The measure, a historic demand of the sector to promote sustainable mobility, has been unanimously agreed this week by the EU finance ministers – the so-called Ecofin -, although it still requires one more step in the European Parliament. The PSOE approved in 2018 a proposal in Congress to urge the PP Government to reduce VAT on bikes, something that at that time could not be done while waiting for the European directive. However, the Ministry of Finance (now the PSOE) will not make any decision until at least February, when it expects to receive the report from the commission of experts for tax reform. Cycling associations and bicycle manufacturers ask the Executive to apply the reduction “as soon as possible.”

The new European directive updates the list of goods and services to which low or super-reduced rates can be applied, or even not carry VAT. And it includes those who contribute to the fight against climate change, among which are bicycles, which can play a fundamental role both in the mobility of citizens and in the delivery of parcels. On the contrary, the norm requires the elimination of tax advantages for products that harm the environment and hinder the fight against climate change, such as fossil fuels.

The entry into force of the regulations will not be immediate, since there is still a final procedure in the European Parliament, scheduled for before next March. In any case, having been unanimously approved by the 27 community ministers of Economy in Ecofin, it is not expected to undergo major changes. Afterwards, the ball will be in the court of the different countries, which will be able to modify the tax in the coming years or not.

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In Spain, the PSOE took in February 2018 to the Road Safety and Sustainable Mobility Commission of Congress a non-law proposal (NLP) to ask the Executive of Mariano Rajoy to reduce VAT on bicycles from 21% (normal rate) at 10% (reduced rate). The initiative was approved even though the PP voted against it, but then it could not be carried out pending the European directive. Now that the PSOE is in the Government, the Ministry of Finance responds to the questions of EL PAÍS that it will not make any decision on the modification of the tax until it receives the report of the commission of experts for the tax reform, scheduled for February.

While waiting, the cycling entities celebrate the arrival of the directive. “It is one more symbol that the European trend helps us to advance and mainstream public policies to support bicycles, and to position bicycles as an environmental and economic ally, a field where it has great potential”, says Laura Vergara, spokesperson for Con Bici, which brings together some 70 cycling associations from all over Spain. “In 2018, Congress urged the Government to lower this VAT. We consider that this NLP is still in force, so it must be carried out as soon as possible and maintain the dialogue of the Administrations with the cycling fabric ”, he adds.

A similar message is launched by Jesús Freire, secretary general of the Association of Brands and Bicycles of Spain (AMBE), which brings together the main Spanish companies: “We encourage the Government of Spain to take measures to reduce VAT on bicycles, accessories as soon as possible. , components and services in line with the decision taken by the EU finance ministers. You have to be consistent with the decision taken in Brussels ”.

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A growing industry

The industry considers that with this norm “the European Union sends a very strong political message”. Manuel Marsilio, director of the Confederation of the European Cycling Industry (Conebi), points out that this legislative decision “has a lot of value and fits perfectly into the European Green Pact, which is thought to be an empty box, but you have to fill it with concrete things and practices, and this is a good example ”. In his opinion, “the reduction of VAT on products that are green and sustainable, such as bicycles, will be a fundamental step in promoting mobility by bike.” In addition, this will materialize in that consumers will have much more purchasing power, which will increase the sale of velocipedes.

According to data from Conebi, in 2019 20 million bicycles (electric or not) were sold in Europe, a number that in 2020 rose to 22 million – the sector experienced a boom after confinement – and is expected to continue growing until 30 million units in 2030. “We believe that structural growth will continue in the coming years, because there is a new wave of people who want to embrace the bicycle and use it more, there is a vision of the bike that it is not only sport, but also a transportation mean. Furthermore, there will be a growing number of companies that will produce more in Europe in the coming years ”, concludes Marsilio.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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