The Slovenia Times

EU finance ministers agree on rules for reducing VAT rates

Daily news

Brussels - At a meeting chaired by Slovenian Finance Minister Andrej Šircelj in Brussels on Tuesday, EU finance ministers reached political consensus to upgrade the EU rules on reduced VAT rates, updating the list of goods and services for which reduced rates or exemptions are allowed.

The new rules in the form of an EU directive give member states more flexibility to choose which products will be subject to reduced, super-reduced or zero VAT rates, but not to the extent proposed by the European Commission in January 2018.

The directive ensures equal treatment for all member states, as it makes the possibility of derogation available to all, subject to certain principles, whereas that option was previously only available to some member states.

The new rules also provide for the gradual phasing out of priority treatment for environmentally harmful products and allow for a rapid response in the event of exceptional circumstances such as a pandemic, humanitarian crisis or natural disaster.

The European Commission's Executive Vice-President Valdis Dombrovskis pointed out that a delicate balance has been struck to avoid a multiplication of reduced VAT rates while reducing fragmentation within the EU.

Tax decisions require the unanimity of member states. The European Parliament is now expected to deliver a second opinion, as the first one from 2018 is no longer appropriate due to extensive changes in the new legislation, which can then be formally adopted.

The meeting also discussed the revision of the 1997 Code of Conduct on Business Taxation, but no agreement was reached and a new proposal for the revision will now have to be drawn up, said Šircelj.

Neither the Slovenian presidency nor the European Commission wanted to talk about the reasons, but Estonia and Hungary are known to have certain reservations.

The ministers also exchanged views on Recovery and Resilience Plans - 22 national plans have been approved so far and 18 member states, including Slovenia, have already received an advance payment. The total value of advances so far is around EUR 54 billion.

The European Commission is still assessing the plans of Hungary and Poland, subject to examination due to alleged breaches of the rule of law, and Bulgaria and Sweden. The Netherlands is the only member state that has not yet submitted its plan.

Dombrovskis said that the assessment of the Hungarian and Polish plans was unlikely to be completed before the end of this year. He stressed that the content was important and would determine the speed of the decision.

In addition, the Slovenian presidency presented reports on progress in the establishment of the Banking Union, including the proposal for a European Deposit Guarantee Scheme, the legislative package for the Capital Markets Union, and the package for the fight against anti-money laundering and terrorism.


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