The European Commission (“EC”) recently opened a feedback period on an initiative to reform the VAT exemptions applied to financial and insurance services. This period is open for four weeks, ending November 19th, 2020. The initiative aims to address the lack of VAT neutrality and the regulatory complexity and uncertainty in delineating the scope of such services subject to the VAT exemption. Accordingly, the EC is exploring two possible main policy options: 1) to eliminate the VAT exemption on financial and insurance services; 2) to limit the scope of the exemption by only taxing certain types of services, for example, fee-based.
Following the feedback period, the initiative will be open for public consultation in early 2021, with hopes of legislation proposed by the end of 2021.
To review current feedback and further information on the initiative please click here.