Ecofin report to the European Council on tax issues

This Council report provides an overview of the progress achieved in the Council during the term of the Slovenian Presidency, as well as an overview of the state of play of the most important dossiers under negotiations in the area of taxation.

During the term of the Slovenian Presidency, the legislative dossiers at varying stages of progress that were on the table of the Council and/or its preparatory bodies, as appropriate, covered the following areas of VAT:

• i. VAT definitive system;
• ii. VAT rates reform;
• iii. the conferral of implementing powers to the Commission to determine the meaning of the terms used in certain provisions of the VAT Directive; and
• iv. exemptions on importations and on certain supplies, in respect of Union measures in the public interest.

VAT definitive system

Member States agree that this dossier still requires thorough technical analysis before the final policy choices are made. As already indicated by the Council18, the best way forward is to continue focusing on the key elements of the Commission proposal and the analysis of options of accompanying measures. Further work on the definitive VAT system should continue while not preventing or slowing down efforts to improve the current VAT system.

VAT rates reform

With this specific legislative proposal, the Commission proposed to:

• i) amend the EU rules on setting of reduced VAT rates (e.g. abolish current transitional provisions allowing to temporarily derogate from the general rules; revise Article 98 of the VAT Directive);
  ii) grant Member States more freedom in their setting of rates (however Member States would have to ensure that their weighted average VAT rate exceeds 12% at any given time);
• iii) introduce a “negative list” of goods and services on which application of reduced rates is not permissible (instead of the current “positive” list).

And much more ….

Source Ecofin report

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