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EU member states gain additional scope to change VAT rates

10 January 2022

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The European Commission has agreed a number of measures to provide Member States additional flexibility to amend VAT rates for particular goods or services.

The measures have been passed to the European Parliament for approval.  The existing discretion available to Member States to set their domestic standard rate (within a range published by the EU) and to determine which goods or services from a central EU wide list are reduced or nil rate, will both remain in place.

  • Updating the list of goods and services (Annex III of the EU VAT Directive) to which all Member States can apply reduced VAT rates. New products and services will be added to the list include those that protect public health, are good for the environment and support the digital transition.
  • Removing the possibility by 2030 for Member States to apply reduced rates and exemptions to goods and services deemed detrimental to the environment and to the EU's climate change objectives.  Goods and services that damage the environment have to be VAT standard rated.

For more information on this topic, or if you require any advice please get in contact with a member of the VAT and Customs Duty team