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Commission proposes to exclude certain goods and services from VAT during crisis period

Commission proposes to exclude certain goods and services from VAT during crisis period
12 April 2021

Today, 12 April, the European Commission proposed to exclude from Value Added Tax (VAT) goods and services distributed by the European Commission, EU entities and agencies to Member States and citizens during a crisis period.

Throughout the coronavirus pandemic, it became clear that the VAT charged on some businesses ends up being a factor of expenditure in procurement proceedings, which puts pressure on already restricted budgets. Therefore, this proposal will amplify the effectiveness of EU funds used in response to crisis and emergencies, whether they are public health emergencies like the coronavirus one, or natural disasters. At the same time, EU-level disaster and crisis management bodies, such as those under the EU’s Health Union and the EU Civil Protection Mechanism, will be enhanced.

Once the proposal is officially adopted, the European Commission and other EU agencies and entities will be able to import and buy goods and services without paying VAT, as long as those acquisitions are being allocated during an emergency response in the EU. The beneficiaries of the goods and services may be Member States or third parties, such as national authorities or institutions, like hospitals, or national health or disaster response authorities. Some of the goods and services covered by the proposal would be, for instance:

  • diagnostic tests and testing materials, and laboratory equipment;
  • personal protective equipment (PPE) like gloves, respirators, masks, gowns, disinfection products and equipment;
  • tents, camp beds, clothing and food;
  • search and rescue equipment, sandbags, life jackets and inflatable boats;
  • antimicrobials and antibiotics, chemical threat antidotes, treatments for radiation injury, antitoxins, iodine tablets;
  • blood products or antibodies;
  • radiation measuring devices;
  • development, production and procurement of necessary products, research and innovation activities, strategic stockpiling of products; pharmaceutical licences, quarantine facilities, clinical trials, disinfection of premises, etc.

The proposed legislation, which will amend the VAT directive, will now be forwarded to the European Parliament for its opinion, and to the Council for adoption. Member States shall adopt and publish, by 30 April 2021, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall apply those measures from 1 January 2021.

Image © European Commission, 2020

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