EU directive, agreement reached for the reduction of VAT to 5% from 2025
New rules to regulate the rates ofvalue added tax for goods and services: the European Commission welcomed the agreement reached today by the EU finance ministers to update the current rules.
These rules, reads the note from the EU executive, will provide governments with one greater flexibility in rates that they can apply and will guarantee the equal treatment between EU member states. At the same time, the updated legislation will align VAT rules with common EU priorities such as combating climate change, supporting digitalisation and protecting public health. The European Parliament must now be consulted on this final text.
In particular, the testo of compromise provides for an update of the list of goods and services to which all Member States will be able to apply – once the new rules come into force – VAT rates reduced to 5 percent compared to the basic threshold of 15 percent.
Between new entry the list is included new products and services that protect public health, such as “pharmaceutical products used for medical and veterinary purposes, including i products used for the purpose of contraception and protection of feminine hygiene and absorbent hygiene products“.
The new list also includes “medical protective equipment, including protective health masks “and” essential goods to compensate for and overcome disability “. The reduced rates on means of transport they may relate to “bicycles, including electric bicycles, motors or other vehicles, or the provision of services relating to the transport of passengers”.
The reduced VAT can be applied by the Member States also for the “la supply of books, newspapers and periodicals, including those rented in libraries, on physical or electronic media or in both formats ”and“ the right of entry to shows, theaters, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas ”.
EU VAT Directive, Franco: “A success after four years of negotiations”
Positive words on the agreement by the Minister of Economy, Daniele Franco who in his speech to the Ecofin Council declared: “The agreement on the VAT rate directive is a remarkable success after nearly four years of negotiations. We fully support this compromise text ”which is“ well balanced and takes into account the different needs expressed in the course of the negotiations ”. “This directive – added Franco – will provide an updated regulatory framework for the application of VAT rates, helping to increase the efficiency of the internal market”.
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