On Friday 18 June in Luxembourg, the EU Finance Ministers welcomed the proposal of the Portuguese Presidency of the EU Council to limit, as a first step, the Commission’s proposal to exempt from VAT the goods and services that the EU makes available to Member States and citizens in times of crisis (see EUROPE 12696/8), to the Covid-19 crisis only.
During the technical discussions on the text, many concerns were expressed by Member States about the scope of the proposal being too broad and the lack of an impact assessment.
At the Ecofin Council meeting, the Portuguese Presidency recalled that it had already suggested to reduce the scope of the proposal to emergencies or situations caused by natural disasters, humanitarian crises or similar extraordinary circumstances, but this was not enough to convince all Member States.
For this reason, Lisbon proposed, in the short term, to limit the scope of the proposal to temporary exemptions linked to the response to the Covid-19 pandemic, which, given the urgency, could be approved by written procedure, and to pursue, in a second phase, the discussion at technical level on a permanent VAT exemption linked to the response to future crises (see EUROPE 12736/18).
At the meeting, all Member States that took the floor (namely Germany, the Netherlands, Croatia, Estonia, Spain, France, Italy, Belgium, Bulgaria, the Czech Republic, Slovenia, Poland, Greece and Cyprus) supported this solution.
“In the interest of limiting negative effects on the budget of Member States and in the interest of legal certainty, it makes sense to initially restrict the proposed regulation to the Covid-19 pandemic. This also serves for the quick adoption”, said German Finance Minister Olaf Scholz.
In addition, Croatia said that in the forthcoming discussions on the broader proposal at technical level, the issue of its financial impact should be addressed. For its part, Estonia would like to see a similar treatment of VAT for national public bodies.
The European Commission welcomed the Portuguese Presidency’s work to get the text adopted quickly, but regretted the lack of ambition of the EU Council.
“We are convinced that limiting too much the scope to certain health crisis such as Covid-19 is not the best approach. Our citizens can duly expect us to be more ambitious and to commit ourselves to establish a future-proof solution”, said the EU Commissioner for Economy, Paolo Gentiloni.
At a press conference after the meeting, Portuguese Finance Minister João Leão said that no formal decision had been taken, but that there was a consensus among the Member States on this solution. On the other hand, all agreed that a quick decision must be taken, but no timetable has yet been set. (Original version in French by Marion Fontana)