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The Council of the EU has reached an agreement on a proposal to update the rules for VAT rates for goods and services. The proposal offers member states more flexibility and equality supporting the bloc’s green digital and public health priorities. The European parliament must now consider the final text.
The proposals:
- change the list of goods and services for which reduced VAT is allowed;
- remove VAT exemptions for environmentally harmful goods while allowing reduced rates for environmentally friendly goods;
- remove member state derogations for VAT reduction unless justified by public policy objectives other than those in support of EU's climate action; and
- add a new provision to address possible future crises such as pandemics natural disasters and humanitarian crises.
Alex Baulf senior director global indirect tax at Avalara explained that this agreement reflects the EU’s recognition that legislation needs to move fast to keep...
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