Council Directive (EU) 2021/1159 of 13 July 2021

What it is

to exempt from Value Added Tax (VAT) goods and services made available by the European Commission, EU bodies and agencies to Member States and citizens during times of crisis. ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion. BACKGROUND: the current VAT Directive (Council Directive 2006/112/EC) prevents Member States from applying a general exemption from VAT to the importation of goods and the supply of goods and services to the Commission or to an EU agency or body intended to support and facilitate measures taken at EU level in the public interest, in particular where the purchases are to be made available free of charge to Member States or to third parties such as national authorities or institutions. Experience gained during the course of the COVID-19 pandemic shows an urgent need for the adoption of measures in order to create readiness to act when dealing with comparable situations in the future. To enable such action, it is necessary to introduce a broad-based VAT exemption for the acquisition of goods and services. Such exemption is in particular a prerequisite for the ability to deliver solutions required to facilitate coordinated measures of crisis management at EU level. It would ensure that measures to be taken under the various Union initiatives are not hampered by amounts of VAT to be collected or related compliance burden imposed on suppliers of the goods or services needed. The European Parliament adopted by 673 votes to 3, with 20 abstentions, following a special legislative procedure (consultation), a legislative resolution on the proposal for a Council directive amending Directive 2006/112/EC as regards exemptions on importations and certain supplies, in respect of Union measures in the public interest. Parliament approved the Commission's proposal without amendments. The proposal aims thus at introducing a broad-based VAT exemption for the acquisition of goods and services by the Commission or by an agency or body established under Union law in the fulfilment of a mandate conferred on it by Union law in the public interest. The proposal will remove VAT as a cost factor for EU programmes. It is important to note that the introduction of this VAT exemption will have no negative implications for the EU budget. In order to reduce administrative burden associated with the use of the paper version of the exemption certificate, the proposal also provides for the introduction of an electronic form.

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