The European Charities’ Committee on Value-Added Tax (ECCVAT) has published its recommendations for changes to the VAT rules proposed by the European Commission earlier this year.
If the European Commission’s proposal comes into fruition, it will give Member States more flexibility about how they set VAT rules at a national level. In addition to keeping a standard VAT minimum rate of 15%, the European Commission has suggested that Member States be able to put in places two separate reduced VAT rates (between 5% and the standard rate), one exemption and one low level reduced rate (between 0% and the reduced rate).
The Charity Tax Group reports that ECCVAT is recommending the adoption of the Commission’s proposal, but is calling for four further amendments to improve the VAT treatment of charities. This includes:
- Recognising the specific position of charities to ensure they receive the benefit of reduced rates and zero rates;
- Allowing the deduction of input VAT of non-taxable services and deliveries provided by charities;
- Protecting current derogations and reduced rates and making them available to charities and other public benefit organisations across Europe; and
- Introducing more regular reviews of the list of the excluded items.