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European Commission launches Public consultation on VAT rules for financial and insurance services, input to be provided by May 3, 2021

VAT rules on financial and insurance services are relevant for private and public sector stakeholders alike. This public consultation will seek the views of a large diversity of stakeholders: businesses, consultancies, representative organisations and public authorities of the Member States (Ministries of finance, tax authorities). Equally, contributions from academics, researchers and non-governmental organisations as well as the general public are welcome. Given that one of the objectives of the public consultation is to assess the impact of the present rules, some questions are specifically addressed to businesses. The other questions are open to all stakeholders.

The five broad “Areas of Intervention” that the Commission identified for review are as follows:

  1. Service definitions (e.g. is a legislative revision of the FSI definitions needed or would clarification of the rules governing the current definitions suffice)
  2. Removal of the exemption (e.g. reviewing the impact of removing some (or all) of the FSI exemptions and / or the implications of introducing a reduced VAT rate)
  3. Option to tax (OTT) (e.g. should it be mandatory for Member States to implement OTT rules)
  4. Cost-Sharing arrangements (e.g. potentially introducing new arrangements for FSIs)
  5. Fixed rate of deduction (e.g. impact of mandatory or optional fixed rates of input tax deduction)

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