Pro-VAT lobby picks upEnglish law firms in Brussels have agreed to co-operate as they fight plans to exempt them from VAT.At a meeting with the Law Society last week, representatives of 15 firms - slightly fewer than half of the English firms in Belgium - agreed to co-ordinate their lobbying efforts with the Belgium finance ministry and the European Commission.By becoming exempt from VAT, European firms will no longer be able to claim back the VAT on goods and services they buy, effectively increasing their costs by 21% - the Belgian VAT rate.

VAT deducted in respect of investments carried out during the past five years may also have to be repaid (see [2001] Gazette, 6 February, 6).Replying to a question in the Belgian parliament last week, finance minister Didier Reynders indicated that European law firms will continue to be exempt, at least until the lawyers' rights of establishment directive is implemented.

Belgium should have done this last year, but has not and is yet to indicate when it will; the European Commission has begun legal action against Belgium as a result.June O'Keeffe, the Law Society's Brussels representative, said she would be co-ordinating the lobbying activities of the firms, as some, such as Freshfields and Allen & Overy, are planning to lobby the government themselves in addition to the Society's work.The firms recognised that they had a common interest in this issue, she added.Neil Rose