VAT Action Plan: EU Commission Presents Measures to Modernise VAT


  • The Action Plan sets out the progressive steps required toward a single EU VAT area. A VAT area that can support a deeper and fairer single market, and help to boost jobs, growth, investment and competitiveness. The Action Plan presents proposals on:
  1. Action towards a robust single European VAT area;
  2. Action to tackle VAT fraud;
  3. Action to support SME’s and E-Commerce;
  4. Action on VAT rates.
  • This briefing note focuses on Action on VAT rates.
  • The EC has put forward two options for modernising VAT rates in the EU:
  1. The first consists of amending the existing VAT Directive, whilst maintaining current reduced rates and derogations and undertaking reviews of goods and service lists that benefit from reduced rates.
  2. The second option involves giving Member States more autonomy over reduced rates they put in place through some general criteria. Safeguards would be put in place to avoid unfair tax fraud and to prevent excessive complexity and distortion which could increase compliance costs. EU legislation, such as Single Market and competition rules and the EU’s economic governance framework will still apply.
  • The EC will ask the European Parliament and the Council, supported by the European Economic and Social Committee, to provide clear political guidance on the options put forward in the Action Plan and to confirm their support for the reforms.
  • The EC will present proposals on VAT rates in 2017.

The complete Ecuity briefing can be found here: VAT Action Plan: EU Commission

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