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Finance Business Service

The EU consults concerning reform of VAT rates



The European commission began process of consultations on reforming of the rules regulating value added (VAT) rates.

An autumn 2017, the commission intends to provide official proposal about reform of the VAT Directive. The directive sets common rules that restrict the right of choice for the Member States to establish VAT rates, and is intended to guarantee neutrality, simplicity and technological effectiveness of the VAT system.

The system was created more than two decades ago, for the purpose of achievement of the final VAT system based on the "principle of origin" amely - system in which location of the seller determines a tax regime including rates. As a result, state members will be obliged to tax the same goods at very similar rates, and the directive established the minimum levels of the taxation in hope that over time VAT rates will meet.

The Commission stated that the implementation of the target system, has opened an opportunity to reform the rules and rates to make them less constraining for the Member States.

At a meeting look for feedback about need of actions of the EU in the field of VAT rates and between harmonization, and autonomy of state members in settlement of VAT rates.

Negotiations will be completed on March 20, 2017.

Author: Olena Kutova

senior lawyer of the Finance Business Service company

Сергей Панов
managing partner
Finance Business Service