Two proposals to transform European VAT law have failed to gain approval of the EU’s Economic and Financial Affairs Council (ECOFIN). Both proposals needed unanimous approval of the delegates to become law.
ECOFIN began its meeting of June 16 by debating a proposal that would allow Member States to apply reduced VAT rates to electronic publications. The Czech Finance Minister objected to this, on the grounds that ECOFIN will soon receive a general proposal on reduced rates as part of the European Commission’s 2016 Action Plan on VAT, which in the Minister’s opinion made the specific proposal on e-publications untimely. Moments later, a Czech-backed plan for a pilot “generalized reverse charge” program was opposed by the French delegation, which had strongly supported the e-publications proposal. The Czech plan would have allowed certain Member States the option to temporarily apply a reverse charge on all supplies of goods and services within their borders, in an effort to combat VAT fraud.
Both proposals will remain in limbo until brought again before ECOFIN. Supporters hope that the Estonian Presidency, which takes office in July, will raise the issues again at the first available opportunity. ECOFIN’s next scheduled meeting is July 11.
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