Finance ministers unanimously approve VAT rate update - Hoofdinhoud
At today's meeting of the Economic and Financial Affairs Council, chaired by Minister of Finance Andrej Šircelj, EU ministers unanimously adopted a general approach on the reform of VAT rates, which is a major achievement by the Slovenian Presidency.
The endorsement of the general approach is an important achievement by the Slovenian Presidency and is the result of intensive negotiations and coordination. The proposal, which was unanimously endorsed by the ministers, meets the different interests and needs of all EU member states. It gives EU member states more flexibility in applying lower VAT rates, with the added possibility of applying "super-reduced" VAT rates and exemptions, with the right to deduct VAT for goods and services required to meet basic needs. In order to ensure equal treatment for all EU member states, the application of reduced VAT rates to supplies of certain goods or services, which some EU member states apply on the basis of authorised derogations, is made available to all EU member states under certain conditions. Limiting the application of reduced VAT rates to a certain number of goods and services, which is taken into account in the proposal, prevents the lower rates from being applied too widely.
In the light of the digitalisation of the economy and strengthening the resilience of EU member state health systems, the list of goods and services to which reduced VAT rates can be applied has been updated in line with the objectives of the European Green Deal, which means that the application of reduced rates to environmentally harmful goods and services will be phased out. In addition, the reform of VAT rates includes a special provision allowing EU member states to respond quickly to a potential crisis by reducing rates or permitting exemptions on VAT deductions.
Today we have approved the update of VAT rates, a matter that has been long discussed by the Council. The updates ensure more equal treatment between EU member states and provide more flexibility in the application of lower VAT rates. The update also means that the application of lower rates to goods and services that are harmful to the environment will be phased out.
Andrej ŠirceljMinister of Finance
Andrej ŠirceljMinister of Finance
Minister Šircelj presented a progress report on the strengthening of the Banking Union. The Slovenian Presidency has focused on ensuring that the work undertaken to date is continued, facilitating future endeavours in this regard. Going forward, the right balance will have to be struck between the necessary reduction of risks in the banking sector and the need for a certain level of risk sharing within the internal market. Minister Šircelj also presented a progress report on the prevention of money laundering and terrorist financing. Last week, the Council adopted a negotiating mandate on the transparency of crypto-asset transfers. The aim of updating existing rules on information on asset transfers is to extend the rules to include certain crypto-assets, thus increasing the effectiveness of the prevention of money laundering and terrorist financing in this area as well.
In addition, the ministers held a regular exchange of views on the post-pandemic recovery. During the Slovenian Presidency, 22 recovery and resilience plans have been approved and more than €50 billion in pre-financing has been disbursed to EU member states under these plans. The European Commission has also given a positive assessment for the disbursement of the first tranche of payments to Spain under the Recovery and Resilience Facility.
"The implementation of the Recovery and Resilience Facility is well under way. The Council has approved 22 national recovery and resilience plans. A total of €291 billion in grants and €154 billion in loans have been approved. So far, 18 EU member states have together received more than €54 billion in pre-financing to support the economy and the green and digital transition," said Minister Šircelj.
At the meeting, the European Commission presented a legislative package for the capital markets union and the ministers held a first exchange of views. The main objectives of the proposal are to improve European companies’ access to funding, create an even safer environment for long-term investment in the EU, and to integrate national capital markets into a single market.
The Commission also presented its package relating to the European Semester. The Sustainable Growth Survey 2022 steers the EU away from crisis management towards a sustainable and equitable recovery that will strengthen the resilience of the EU economy. The Alert Mechanism Report notes that economic activity has picked up since spring this year and that economic policy coordination has shifted towards ensuring an inclusive recovery and stronger resilience. Most EU member states are expected to reach pre-crisis output levels by the end of 2021. The recommendations on the economic policy of the euro area state that members of the euro area are advised to continue to pursue national fiscal policies that support a sustainable recovery in 2022 and 2023.
He also informed the other ministers about the state of play on the adoption of the EU budget, which was formally approved by the Council and the Parliament on 23 and 24 November 2021, respectively. The 2022 EU budget reflects the EU's main priorities: economic recovery, the fight against climate change and the green transition.
At the meeting, the ministers for economic and financial affairs also gave a mandate to the new EU candidate for the chair of the International Monetary and Financial Committee of the International Monetary Fund. The Spanish Deputy Prime Minister, Nadia Calviño, will run for the post in the IMF's upcoming procedures.