Economic and Financial Affairs Council (ECOFIN) reach agreement on VAT proposals

Oct 08, 2018

ECOFIN reached political agreement on a number of VAT measures at a meeting held in Luxembourg on 2 October.  The VAT measures cover the VAT rate on electronic publications, anti-VAT fraud mechanisms, and a number of short-term fixes to apply until reform of EU VAT rules is complete. 

The Council agreed a proposal allowing member states to apply reduced, super-reduced or zero VAT rates to electronic publications, thereby allowing alignment of VAT rules for electronic and physical publications.  A proposal to allow temporary derogations from normal VAT rules to better prevent VAT fraud was also agreed. The proposed directive will allow member states impacted by VAT fraud to temporarily apply a generalised reversal of VAT liability on domestic supplies of goods and services above a threshold of €17,500 per transaction.  The temporary measure will only operate up to 30 June 2022.

Pending the introduction of the new VAT system, four short-term 'quick fixes' were also agreed by ECOFIN on VAT aspects of trade between the member states. Discussions are ongoing on a definitive VAT system to replace the current 'transitional' VAT arrangements, which have been applied since 1993.

The Council also adopted measures to strengthen administrative cooperation in order to effectively tackle the most widespread forms of cross-border fraud.