The Charity Tax group has summarised the EU’s proposed changes to VAT. In addition to keeping a standard VAT rate of minimum 15% the European Commission has proposed that Member States be now able to put in place:
- two separate reduced rates of between 5% and the standard rate chosen by the Member State
- one exemption from VAT (or ‘zero rate’)
- one reduced rate set at between 0% and the reduced rates
The current list of goods and services (Annex III) to which reduced rates can be applied would be abolished and replaced by a negative list (a new Annex IIIa), to which reduced rates cannot be applied.
These legislative proposals will now be submitted to the European Parliament and the European Economic and Social Committee for consultation and to the Council for adoption. It is possible to send comments on the European Commission’s proposals. The feedback period will be open until 15 March 2018.