VAT RATES FOR ELECTRONIC PUBLICATIONS

The Council discussed a proposal that would enable reduced VAT rates to be applied to electronic publications. The proposal is aimed at allowing member states to apply reduced rates to electronic publications if they so wish, amending the EU’s directive on VAT. It would thereby contribute to the EU’s ‘digital single market’ plan.

Despite progress made on the proposal, the Council was unable to reach an agreement at this stage. The Council needs unanimity to adopt the directive, after consulting the European Parliament. The European Parliament voted in support of this proposal on 1 June 2017.

VAT FRAUD – ‘REVERSE CHARGE’ MECHANISM

The Council discussed a proposal that would allow derogations from normal VAT rules with the aim of better preventing VAT fraud. The proposed directive would allow member states, if they so wish, to apply temporarily a generalised reversal of VAT liability. Despite progress made on the proposal, the Council was unable to reach an agreement at this stage. The Council needs unanimity to adopt the directive, after consulting the European Parliament.

The so-called reverse charge mechanism involves shifting liability for VAT payments from the supplier to the customer. The Commission issued the proposal in December 2016 at the request of member states particularly affected by VAT fraud. Under the directive, member states that wish to apply the reverse charge mechanism would be able do so under certain conditions. The mechanism would apply to all domestic supplies of goods and services above an invoice threshold of €10 000.