Active lobbying efforts to preserve low VAT rate for the floriculture sector

The Public Affairs department represents the interests of Royal FloraHolland, its members and the floriculture sector in society, the media and politics. This is an update on the lobbying activities to preserve the low VAT rate for ornamental plants or flowers.

The reduced rate for flowers and plants has been in place in the Netherlands since 1975. At the time, the aim was to boost turnover and employment in the sector and make flowers and plants accessible, even to lower income groups. In our view, an indispensable tool for the economy. The current application of reduced VAT rates is under review at present in the Netherlands.

A report was commissioned by the Dutch Ministry of Finance and discussed in the House of Representatives in recent weeks. Together with the VGB, VBW, Tuinbranche NL and the CVAH, we are fighting hard, on behalf of the VBN, to retain the low VAT rate. Never before has the reduced VAT rate been so broadly evaluated.

Higher VAT rate will hit the Dutch floriculture sector hard

To substantiate our position, we are having research that was previously conducted by Wageningen Economic Research updated. The floriculture sector has high price elasticity: previous research and experience in France and Spain, already showed that as a result of the increased VAT rate, consumer prices rise along with it and, as a result, the purchase of ornamental plants or flowers falls. The same will apply in the other European countries (15) where the reduced rate will also be applied. If all European countries start applying the general VAT rate on ornamental plants or flowers, consumer prices will rise everywhere and consumption will fall. That drop in demand in the rest of Europe will hit the Dutch floriculture sector hard.

Lobbying focuses on maintaining a strong floriculture sector

Our lobbying obviously focuses on maintaining a strong floriculture sector. The Dutch floriculture sector is the most innovative worldwide, where many technical solutions are found that are also applicable to a

sustainable food sector. Economically, we are a very important sector with a production value of about €6 billion a year and a total export value of over €9 billion (2021). We make a great contribution to the earning capacity of the Netherlands! In addition, the sector is under pressure due to inflation, increased energy prices and wage costs.

Essential role in energy transition and greening of urban areas

We believe that the goals of the reduced VAT rate, which are tested for efficiency and effectiveness, should be updated. Over the years, the floriculture sector has proven that it plays a vital role in energy transition and the greening of urban areas. Planting more greenery in cities helps reduce temperatures in summer months by up to 4 degrees around parks. It also increases biodiversity, as plants and flowers are important for the survival of animal and insect species. The positive effect of flowers and plants on mental and physical health has also been established scientifically.

We are using the summer months to further engage with various members of Parliament ahead of the government response expected on the state opening of parliament (Prinsjesdag).

Do you have any questions or would you like more information on this topic? Please send an email to publicaffairs@royalfloraholland.com.