EU ministers are seeking a deal today to prolong reduced sales tax rates in trades such as home repairs.
Negotiations made simpler by news that France was no longer likely to block a deal.
French President Jacques Chirac promised before re-election in 2002 to reduce standard value-added tax rates on restaurants, but he effectively threw in the towel yesterday after talks with German Chancellor Angela Merkel, whose country opposes the idea.
His retreat raised spirits as finance ministers from the 25 EU countries met in Brussels to seek an agreement without which discounted Vat rates are no longer legal for a broad range of services from hairdressing to window-cleaning and house repairs.
Austrian Finance Minister Karl-Heinz Grasser, chairing talks in Brussels because his country holds the EU's presidency, put it bluntly as he entered the meeting, saying a deal had to be done on Tuesday and that vetoes would be unwelcome.
The EU has a standard minimum Vat rate of 15 per cent, but it has a list of special exceptions that expired in December and needs to be renewed by unanimous agreement among member states to keep governments on the right side of the law.
A key stumbling block was Mr Chirac's promise to put sit-down meals in restaurants on the same footing as fast-food chains by lowering the Vat rate in French bistros to 5.5 per cent from close to 20 per cent at the moment.
Germany, which plans to increase Vat rates in 2007, has long opposed Mr Chirac's demands in the belief that it would open the floodgates to other demands, and others such as Poland and the Czech Republic also voiced objections.
Some observers said that the French government's decision to clamp down on government expenditure from this year onwards due to a soaring national debt had made Mr Chirac's promise, worth about €3 billion a year in foregone tax income, untenable.