VATupdate

European Commission proposes VAT exemption for vital goods and services distributed by the EU in times of crisis

The European Commission (the Commission) has proposed to exempt from value-added tax (VAT) goods and services made available by the Commission, European Union (EU) bodies and agencies to Member States and citizens during times of crisis. This is in response to the experience gained during the course of the COVID-19 pandemic.

Among other things, it has been determined that the VAT charged on certain transactions ends up being a cost factor in procurement operations that strains limited budgets. Therefore, this initiative aims to maximize the efficiency of EU funds used in the public interest to respond to crises, such as natural disasters and public health emergencies. It also aims to strengthen EU-level disaster and crisis management bodies, such as those falling under the EU’s Health Union and the EU Civil Protection Mechanism.

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