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. Last Updated: 07/27/2016

Poland's VAT Snub Troubles EU

BERLIN -- The European Union has been left in a "very serious situation" by Poland's rejection of a proposal on reduced VAT rates, approved by the bloc's 24 other members, Austria's Finance Minister said Tuesday.

"The presidency is analyzing the situation and will make a proposal on how things should proceed in the coming days," Karl-Heinz Grasser told reporters on the sidelines of a German DIHK chambers of trade and commerce event in Berlin.

Poland on Monday upheld its objection to an EU agreement on keeping lower value-added tax on some labor-intensive services -- such as home repairs or hair dressing -- effectively blocking a deal that requires unanimity.

Austria had proposed to extend by five years an arrangement that expired last year that allows VAT on the selected services in several member states to be kept lower than the minimum rate of 15 percent.

But Poland's Finance Ministry is arguing it would be unfair if "old" EU member countries saw their special rates prolonged while the brief exceptions Warsaw agreed on during accession talks expire by the end of 2007.

Grasser on Tuesday said the Austrian presidency still hoped it would be possible to reach a solution to the problem, noting it potentially affected 200 million consumers in nine countries.

An Austrian spokesman in Brussels said EU member states were trying to find a solution.