EU VAT rates

The Council of the European Union has reached agreement on proposals to update EU rules for VAT rates for goods and services. 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 climate action; and
• add a new provision to address possible future crises such as pandemics, natural disasters and humanitarian crises.