BRUSSELS, (Reuters) – On Tuesday, European Union finance ministers agreed to modify EU rules to reduce the Value Added Tax on goods and services related to climate change and health protection. This will allow the EU to be more prepared for the digital age.

They also agreed to eliminate by 2030 the lower rates of VAT on fossil fuels and other products that contribute to greenhouse gas emission. This will help 27 nations achieve their goal of not emitting CO2 net-terms by 2050.

EU standard minimum VAT rate for all goods and services: 15%. There are exceptions to this rule where the lower VAT rate is at least 5%. Actual taxes rates vary from one country to another and even between products. Some countries agree to specific rates of tax for certain products.

To give small farmers time to adapt, the ministers reached an agreement that lower VAT rates would be maintained and exempted for chemical fertilizers.

This agreement will enable governments to lower the VAT rates for products and services, making it more suitable for digital age technologies like live streaming and internet access.

The ministers were aware of the COVID-19 epidemic and agreed to include in the lower VAT rates the sale of essential medical gear, such as face masks.

A lower VAT rate will also be available for products that are linked to combating climate change such as solar panels, green heating systems, and bicycles.

Once the European Parliament consults on the agreement (which could take up to March 2022), the lower rates may become feasible.