A directive (Council Directive 2006/18/EC of 14 February 2006 amending Directive 77/388/EEC with regard to reduced rates of value added tax) has been adopted allowing EU Member States to continue to apply reduced VAT rates in respect of certain labour intensive services.

The arrangements allowing member states to apply VAT rates lower than 15% to certain services had expired on 31 December last. The effect of this decision is to extend permission for lower rates on labour intensive services until the end of 2010. The services involved include small repair services, the renovation of private dwellings, window cleaning and private household cleaning, domestic care services and hairdressing.