The European Commission proposed on Monday 12 April to exempt the goods and services that the EU makes available to Member States and citizens in times of crisis from the value added tax (VAT).
With this proposal, the Commission intends to draw from all the lessons learnt from the Covid-19 pandemic, which showed, among other things, that VAT on certain transactions ended up being a cost factor in procurement operations.
The proposal, which takes the form of a Directive amending the ‘VAT Directive’, will allow the Commission and other EU agencies and bodies to import and purchase goods and services free of VAT when they are intended for distribution in view of emergency interventions within the EU, such as natural disasters and public health emergencies.
The beneficiaries of these measures can be Member States or third parties, such as a hospital or a national health or disaster response authority.
The goods and services that can benefit from this new exemption include: - diagnostic tests and screening materials and laboratory equipment; - personal protective equipment; - tents, camp beds, clothes and food; - search and rescue equipment; - antimicrobials and antibiotics; - blood products and antibodies; - radiation measuring devices.
The EU has already taken a series of measures in the field of taxation and customs to support the fight against the Covid-19 pandemic. For example, it temporarily exempted from customs duties and VAT imports of masks and other protective equipment needed to combat the pandemic (see EUROPE 12534/15) and temporarily exempted from VAT vaccines and testing kits sold to hospitals, doctors and individuals (see EUROPE 12591/1).
“These measures provided fast, efficient and targeted solutions for urgent needs occurring in the course of the Covid-19 pandemic. They are however very limited in scope of application and temporary in nature and not all Member States have chosen to apply the option of zero rates where that has been made available”, explains the European Commission.
Even if its scope is broader, the adoption of this new proposal remains particularly relevant and urgent in view of the Covid-19 pandemic. Thus, the Commission proposes that Member States retroactively apply the new VAT exemption to transactions carried out from 1 January 2021.
The text must now be submitted to the EU Council for adoption and to the European Parliament for opinion.
See the proposal: https://bit.ly/2PPhS4O (Original version in French by Marion Fontana)