The abolition of VAT on fruit and vegetables will take at least another two years. The cabinet will first investigate which products will come under the new tax rule.
Eliminating VAT will cost approximately 1 billion euros, according to the cabinet. That money can possibly be earned back because people will eat healthier if fruit and vegetables become cheaper. This will lower health care costs. This is stated in a letter sent to the House of Representatives by State Secretaries Maarten van Ooijen (Public Health) and Marnix van Rij (Taxation).
In the coalition agreement, VVD, D66, CDA and ChristenUnie have agreed that the VAT on fruit and vegetables will be reduced to 0 percent. But that turns out to be more complicated than expected. The cabinet has hired an external agency to determine which products will and which will not fall under the scheme. The cabinet is afraid that if this is not recorded properly, all kinds of lawsuits will follow.
Apple sauce
It is clear that, for example, a fresh apple or cucumber will fall under the rule. But what to do with fresh fruit or vegetables that are pureed or frozen? It is legally difficult, for example, to only include fresh spinach under the VAT reduction and frozen spinach not. Things are different again when cream is added to the frozen spinach.
Another example is applesauce. Pureed apples without additives could be dropped under the VAT reduction. But if sugar has been added and it is less healthy, the cabinet would prefer not to. However, case law shows that it is not so easy to treat two products that are very similar for tax purposes differently. A similar problem occurs with products that contain fruit and vegetables, such as pizzas.
The agency should come up with a definition next year that is workable for both the tax authorities and food producers. In addition, the cabinet is investigating the possibility of introducing a tax on sugar. There are still doubts about a tax on soft drinks alone, as already exists in other countries, or on other sugary products as well.
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