Market leading insight for tax experts
View online issue

ECON committee amends VAT reduced rates proposal

printer Mail

The EU Parliament’s economic and monetary affairs (ECON) committee has tabled its report containing amendments to the Commission’s proposal to allow member states greater flexibility in applying reduced rates, in advance of the plenary debate in Strasbourg on 2 October. The committee published its draft report on 2 May.

The Commission’s proposal, published on 18 January 2018, would allow member states to apply a reduced rate of between zero and 5%, in addition to the two reduced rates currently permitted of no less than 5%, and one zero rate (subject to an overall weighted average VAT rate of at least 12%). It would also replace the current list of goods and services to which reduced rates can be applied, with a new list of products to which the standard rate would always be applied.

The Commission proposed setting a minimum standard rate of 15%. The ECON committee has amended the proposal by adding a maximum level for the standard rate of 25%.

The committee has also amended the proposal to call on member states to avoid the use of reduced rates for ‘harmful or luxury products’.

The Commission intends these new rules to come into force in 2022, at the same time as the amended VAT directive introducing changes for the operation of the definitive VAT system.


Issue: 1414
Categories: News , Indirect taxes , VAT