In the event of changes in the rates, Member States may:

• effect adjustments in the cases provided for in paragraph 1 (a) in order to take account of the rate applicable at the time when the goods or services were supplied,

• adopt all appropriate transitional measures.

1. (a)

   The standard rate of value added tax shall be fixed by each Member State as a percentage of the taxable amount and shall be the same for the supply of goods and for the supply of services. From 1 January 2001 to 31 December 2005 , this percentage may not be less than 15 %.

   On a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, the Council shall decide unanimously on the level of the standard rate to be applied after 31 December 2005 .

   F4Member States may also apply either one or two reduced rates. These rates shall be fixed as a percentage of the taxable amount, which may not be less than 5 %, and shall apply only to supplies of the categories of goods and services specified in Annex H.

   F5The third subparagraph shall not apply to the services referred to in the last indent of Article 9(2)(e).

2. (b)

   Member States may apply a reduced rate to supplies of natural gas and electricity provided that no risk of distortion of competition exists. A Member State intending to apply such a rate must, before doing so, inform the Commission. The Commission shall give a decision on the existence of a risk of distortion of competition. If the Commission has not taken that decision within three months of the receipt of the information a risk of distortion of competition is deemed not to exist.

3. (c)

   F6Member States may provide that the reduced rate, or one of the reduced rates, which they apply in accordance with the third paragraph of (a) shall also apply to imports of works of art, collectors' items and antiques as referred to in Article 26a (A) (a), (b) and (c).

   Where they avail themselves of this option, Member States may also apply the reduced rate to supplies of works of art, within the meaning of Article 26a (A) (a):

   • effected by their creator or his successors in title,

   • effected on an occasional basis by a taxable person other than a taxable dealer, where these works of art have been imported by the taxable person himself or where they have been supplied to him by their creator or his successors in title or where they have entitled him to full deduction of value-added tax.

4. (d)

   F7. . . . .

5. (e)

   F8. . . . .

F9 Each reduced rate shall be so fixed that the amount of value added tax resulting from the application thereof shall be such as in the normal way to permit the deduction therefrom of the whole of the value added tax deductible under the provisions of Article 17.

F2On the basis of a report from the Commission, the Council shall, starting in 1994, review the scope of the reduced rates every two years. The Council, acting unanimously on a proposal from the Commission, may decide to alter the list of goods and services in Annex H.

Subject to paragraph 3 (c), the rate applicable on the importation of goods shall be that applied to the supply of like goods within the territory of the country.

The Portuguese Republic may apply to transactions carried out in the autonomous regions of the Azores and Madeira and to direct imports to those regions, reduced rates in comparison to those applying on the mainland