In 2006, the European rules on adjustment of initial input tax deductions relating to capital goods were extended to services which have characteristics similar to those normally attributed to capital goods. The extension enhances the neutrality of the VAT system and enables the Member States to combat VAT-saving schemes involving services. In this article, the author briefly describes the development of the rules on adjustment of initial input tax deductions and several of the VAT-saving schemes involving those services. He also discusses the possible effects of the amendment of the VAT Directive.