1. Introduction. – 2. EU and National Frameworks. – 2.1. Contextual Background and National Framework. – 2.2. Legal and Theoretical Framework. – 3. Methodology. – 3.1. Analytical Approach. – 3.2. Comparative Scope and Criteria. – 3.3. Selection of Jurisdictions. – 4. Analysis and Results. – 4.1. Legal Uncertainty in the Slovenian Framework. – 4.2. Comparative Analysis of Selected Member States. – 4.3. Discussion. – 5. Conclusions.
Background: Article 98 and Annex III (10) of the EU’s Directive 2006/112/EC permit reduced VAT rates for “the supply, construction, renovation and alteration of housing, as part of a social policy”. While the provision grants Member States discretion, the Court of Justice of the European Union (CJEU) requires strict interpretation and compliance with the principles of legal certainty and proportionality. Slovenia applies a reduced VAT rate based almost exclusively on technical parameters such as maximum floor area, without income thresholds, formal certification or links to national housing policy. This raises questions about the coherence of the Slovenian regime with EU requirements and comparative practice.
Method: This article applies a doctrinal and comparative legal methodology. At the EU level, it examines Article 98 and Annex III (10) of the VAT Directive, as well as relevant CJEU case law, to determine the requirements of legal certainty, proportionality, and targeted social policy implementation. At the national level, it analyses the Slovenian Value Added Tax Act and the Rules on the Implementation of the VAT Act. The comparative component covers twelve Member States and the United Kingdom, focusing on eligibility criteria, social targeting mechanisms, and administrative certification.
Results and Conclusions: The analysis shows that Slovenia’s technically elaborate reduced VAT regime lacks a coherent social policy focus. Undefined legal concepts, reliance on construction-law classifications, ambiguous treatment of appurtenant parts and leisure facilities, and the absence of income-based or certification mechanisms undermine legal certainty and targeting. In contrast, Member States such as France, Spain, Italy, Luxembourg, Portugal, and Romania employ income thresholds, administrative certification, value caps or claw-back mechanisms, while Slovenia and Hungary rely exclusively on technical parameters. Slovenia thus satisfies formal legal certainty but fails to meet the substantive requirements of proportionality and social targeting under the VAT Directive. This article recommends income-based eligibility criteria, administrative certification, clearer statutory definitions, and closer alignment with national housing policy objectives.