It is expected that EU finance ministers will adopt a proposed revision to the EU VAT Directive at the upcoming Economic and Financial Affairs Council meeting on 7 December 2021. The amendment would amend the list in Annex III of the VAT Directive of products and services eligible for a reduced VAT rate.
The proposal, submitted by the Slovenian EU Council president on October 21, allows member states to apply a reduced rate of between 5 – 15% to no more than 24 of the supplies listed in revised Annex III. The proposal would also allow member states to apply a super-reduced rate (below 5%) or a zero rate to up to 7 types of supplies. Supplies eligible for the super-reduced or zero rates consist of a subset of the items in Annex 3. Finally, the proposal also creates a new scheme allowing for reduced rates to apply to supplies of works of art, collectors’ items, and antiques. This proposal marks a shift from the European Commission’s previous proposal from January 2018 where a negative list of products and services to which reduced rates could never be applied was introduced.
Items covered by the Slovenian proposal include solar panels, livestreamed events, and internet access services (excluding content provided through the internet). It also includes items such as children’s clothing, which were previously only available to member states with special derogations. The proposal indicates the application of the reduced rates pursuant to the list is open to all member states in the principle of equal treatment.
More information will be posted as information becomes available.
