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← Overview Database of Innovative Social Policies in Europe

Vat-reduction for labour-intensive services from 19% to 6%

Country of implementation
The Netherlands
General short description of the innovation
As part of an European experiment vat-rate was lowered in five labour intensive service sectors: reparation of bicycles, reparation of foot- and leather-wear, reparation and modeling of clothes, hairdressing services and painting/plastering of houses older than 15 years.
Target group
Total Population
Policy Field
  • general fiscal
Type of Policy
  • public
Duration of the policy
Scope of innovation
  • Scope: temporary
  • Number of intended beneficiaries: 25197 companies working in the five selected sectors
  • Spatial coverage: national
General description of (intended) objectives and strategies
The expected mechanism of this measure was that lower VAT would decrease the cost of services which would increase demand for services which would lead to higher employment in these sectors.
Nature of the innovation-short-term perspective
short-term experiment
Type of innovation
  • retrenchment or expansion of an existing/earlier policy
New outputs
  • subsidies/tax-credits
Clarification of intended mechanisms, outputs and outcomes (optional)
The innovation consisted of lowering existing VAT for certain services, in accordance with an European experiment
Intended target group
SME active in the five selected, labour-intensive sectors: SME in cycle repair, repair of clothing/shoes, hair-dressers and painting/plastering
Employers-private institutional actors
SME in cycle repair, repair of clothing/shoes, hair-dressers and painting/plastering
Actors involved in policy-making/implementation and/or evaluation
  • central state (regulation of the tax-break)
  • supra/extra national organisations (The EU initiated the experiment)
Intended output
  • subsidies/tax-credits
Did the innovation have any outcome related to job quantity?
employment rate has not increased as a result of this measure
Clarification of outcomes in terms of impacting resilience and labour market inclusion
The experiment is not considered to be successful. Prices for services have decreased less than could be expected. A trend analysis does not show a break in employment development compared to other sectors, so an impact on employment is not plausible. In two branches however (clothing repair and painting/plastering), no data were available to assess the impact.
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