News from the EU – from Accountancy Europe July 2021
EU finance ministers discusses VAT rates reform
There was no meaningful progress on the proposed VAT rates reform at the 18 June meeting of EU finance ministers. The rates reform would grant EU Member States more freedom in setting their national VAT rates.
The Portuguese Presidency proposed to include a ‘standstill clause’ that would allow all Member States to continue to apply their current VAT derogations on reduced, zero and super-reduced rates, save those harmful to the environment.
Belgium, Estonia, Ireland, Greece, Spain, Croatia, Slovenia, Lithuania, Finland, Slovakia, Poland, the Czech Republic, Bulgaria, Romania and Luxembourg showed their support for this Presidency compromise. But notably France, Germany and Sweden objected, fearing it would open the door for new derogations.
Most Member States supported Portugal’s proposal of phasing out environmentally harmful goods from reduced rates, including pesticides, chemical fertilisers, firewood and natural gas.
Finance ministers progress on COVID VAT alleviations file but no conclusion yet
At the same meeting, ECOFIN welcomed the Portuguese Presidency’s proposal to limit the EC’s proposal to exempt from VAT the goods and services that the EU makes available to Member States and citizens in times of crisis to the COVID crisis only. The EC regretted the Council’s limitation to COVID.
After the meeting, the Portuguese Presidency welcomed progress made but lamented that there was for now no unanimity. All Member States reportedly agreed that progress on this file should be swift but no timeline for progress was provided.
MEPs Questions & Replies
EC explains VAT e-commerce reporting obligations