The European Commission has adopted an Action Plan on VAT – Towards a single EU VAT area. It proposes a number of reforms to the VAT system, including, most importantly for charities, options for a modernised policy on EU rules governing VAT rates.
The Commission has put forward two options for giving Member States more freedom in relation to VAT:
- Extension and regular review of the list of zero and reduced rates
- Abolition of the list of zero and reduced rates
CTG has been liaising with European Commission officials in advance of the publication of the Action Plan to ensure charity’s voices are heard in this review and has received the following update: “The current draft of the action plan does not contain any direct references to charity reliefs. However, we are fully aware of the fact that any amendment of the VAT rate structure could have impacts on charities, and wish to reassure you that this will be duly taken into account in formulating the Commission’s policy proposals”.
CTG Chairman, John Hemming, commented: “It is reassuring that the Commission has confirmed that it will not scrap zero or reduced rates, but will instead give more flexibility to Member States on VAT rates, including the option for other countries to use zero rates. It is crucial that the implications of the reform proposals are scrutinised closely, to identify both risks and opportunities. We welcome the Commission’s commitment to ongoing engagement with the sector and we will also be working with European colleagues through the European Charities’ Committee on VAT (ECCVAT).
Notes for editors
The Charity Tax Group (CTG) has over 500 members of all sizes representing all types of charitable activity. It was set up in 1982 to make representations to Government on charity taxation and it has since become the leading voice for the sector on this issue. CTG has persuaded successive Governments to introduce a range of tax reliefs and has also campaigned successfully to protect existing concessions, saving charities a considerable amount of money in the process.