VATupdate

EU budget for 2021-2027 – VAT  based own resource – what is this?

On July 21, 2020, the European Council adopts conclusions on recovery plan and EU budget for 2021-2027, including agreement on introduction of new taxes,

See  EU coronavirus recovery package new taxes – VAT-based own resources, nonrecycled plastic packaging waste tax, carbon border adjustment mechanism and a digital levy

This included a measure on VAT  based own resource

”144 The current VAT-based own resource will be replaced by the Commission’s simplified and refined alternative method from January 2019 with a uniform rate of 0.3% which will apply to the VAT bases of all Member States determined in accordance with the refined methodology proposed by the Commission. For each Member State, the VAT base to be taken into account for this purpose shall not exceed 50% of Gross National Income”

What is the ”VAT based own resource”? See link

This own resource is a percentage coming from the harmonised value added tax (VAT) base of each EU country. Below is an explanation of how it is calculated and of the role of the European Commission in ensuring that each Member State contributes the correct amount to the EU budget.

Source ec.europa.eu

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