The Commission welcomed the decision achieved by EU Finance Ministers at the ECOFIN Council meeting in Brussels on December 7, 2021, to revise the present rules controlling VAT rates for goods and services.
The new legislation will provide governments more freedom in applying tariffs while also guaranteeing more equity among EU Member States. At the same time, the revised rules would align VAT regulations with EU goals such as climate change, digitalization, and public health protection.
The current EU VAT rate laws are over thirty years old and in desperate need of updating, considering the change of the overall VAT rules over time.
The transition to a system in which VAT is paid in the consumer’s Member State rather than the supplier’s Member State means that higher rate diversity is less likely to undermine the Single Market’s functioning or produce competitive distortions. Simultaneously, we must avoid a proliferation of decreased rates, which would jeopardize Member States’ ability to collect revenues post-COVID-19.
Furthermore, the regulations as they stand must be completely linked with the EU’s overall aims, since they may have a negative impact on development in such areas in some situations.
The new regulations are as follows: