EU: Agreement to allow reduced rates of VAT
The updated rules will now be sent to the European Parliament for its consultation on the final text.
The updated rules will now be sent to the European Parliament for its consultation.
The European Union (EU) finance ministers today agreed to update the current rules governing value added tax (VAT) for goods and services.
The European Commission (EC) in 2018 proposed to reform the VAT rates. Today’s EC release announces an agreement to revise the EU VAT rates by:
- Updating the list of goods and services to which all EU Member States can apply reduced VAT rates
- Not allowing EU Member States to apply reduced rates and exemptions to goods and services deemed detrimental to the environment and to the EU's climate change objectives (by 2030)
- Making available to all countries certain exemptions or derogations (departures) for specific goods and services, as currently in place for “historical reasons” in certain EU Member States (those derogations not justified by public policy objectives unless in support of EU's climate action to end by 2032)
The updated rules will now be sent to the European Parliament for its consultation on the final text by March 2022. Once formally adopted by EU Member States, the legislation will become effective 20 days after its publication in the Official Journal of the EU.
Read related guidance in the form of “questions and answers” (Q&As)
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.