After almost four years of work, EU Finance Ministers unanimously agreed, on Tuesday 7 December, on a proposal for a directive reforming the European system of reduced rates of value added tax (VAT) (see EUROPE 11940/15).
“I conclude that we all agree with the compromise text”, said the Slovenian Finance Minister, Andrej Šircelj, after the public debate.
He listed the main elements of the agreement: - member States will have “more flexibility” to choose the products or services to which they will apply reduced rates; - this flexibility is counterbalanced by provisions to “avoid the proliferation” of reduced rates; - the existing derogations for some countries will be extended to all Member States to ensure equal treatment; - the Directive aligns with the objectives of the European Green Deal with the phasing out of reduced rates for the supply of fossil energy and the phasing in of reduced rates for environmental and health-related goods; - the rules are adapting to the digitalisation of the economy and the economy will be more responsive to “exceptional circumstances” such as a pandemic.
It should be noted that the Ecofin Council sets January 2042 as the date from which the reduced VAT rates for non-social housing transactions will increase from at least 5% to 12% (Article 105).
“We should communicate positively on this agreement”, said Luxembourg’s Minister Pierre Gramegna during the debate, where the ministers who spoke underlined the balanced nature of the compromise presented.
The Parliament is invited to give its advisory opinion by spring 2022.
See the approved text: https://bit.ly/305nltk (Original version in French by Mathieu Bion)