European Commission opens feedback period on VAT exemption for vital goods and services distributed in times of crisis

The European Commission has opened the feedback period for its proposal to amend Directive 2006/112/EC (the VAT Directive), so as to provide an exemption from VAT on goods or services supplied to and goods imported by the Commission or an EU agency or body and provided to Member States and citizens during times of crisis—particularly where the EU is distributing them free of charge to Member States according to their emergency needs.

The initiative follows experiences of implementing emergency measures during the coronavirus, where VAT charged on some transactions ended up being a cost factor in procurement operations that strained limited budgets. The objective of the initiative is to maximise the efficiency of EU funds used to respond to crises and strengthen EU-level disaster and crisis management bodies.

Goods and services covered under the proposed exemption include:

• 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, and
• quarantine facilities, clinical trials, disinfection of premises, etc

Responses to the proposal must be submitted by 8 June 2021. The proposal will be submitted to the EU Parliament for its opinion and to the Council for adoption. Member states need to adopt and publish the laws, regulations and administrative provisions necessary to comply with this Directive by 30 April 2021 and it will apply from 1 January 2021.

See: Proposal for a Council Directive amending Directive 2006/112/EC to lift cost of VAT on Union measures in public interest and Coronavirus Response: Commission proposes to exempt vital goods and services distributed by the EU from VAT in times of crisis.