Eibach Arb is what you want, has larger hoops so it sits further back and wont rub. R1GTI is doing a Group buy, I think it's still on, check it out.
The lowest I've known... hmmmmm, Some Dutch geezer with that air-suspension setup. They just drop it all the way down for shows and the wheels go under those arches, couldn't drive it around like that obviously!
I'm pretty low myself, I can manage 1 finger under the front arches, soon change that though 
yeah there was a car with air suspension in 'The Golf' is that the one you mean. its the one that started me thinking. so is the ARB the only problem you've encountered getting your car that low?
Not sure m8, the guy i'm talking about was at inters this year, navy blue GTI slammed on BBS RC's. I haven't changed my Arb yet [B)] (its on my list though) just hope the driveshaft is ok. One thing that makes me cringe though is whenever i make a tight corner and i hear the tyres scrapping the arches on the front, got some lovely grooves in the tyres! Need smaller tyres but can't afford yet . 18x8 is a good size for the mk4, I would look at getting skinny tyres cos they will help. You may also want to have your arches rolled slightly and maybe remove the wheel arch liners if you want full'ish lock.
I'm going to post a topic in the wheels/tyres section asking which tyre size would be best, I get confused with all the sizes, i'll keep u posted. 
how low can u go before you start to encounter any of these problems? Would 50mm be ok? 40 just doesn't look low enough
Rye, -40mm -50mm is fine on 18's you wont experience any problems. We're talking -90mm and up and problems occur. 
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