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EU VAT News

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Date22 Jan 2018
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VAT rate changes 2018

Below you will see a summary of the principle VAT rate changes in the European Union on 1st January, 2018.

Country VAT Change
Cyprus Imposition of 19% standard VAT rate on land transactions for business use
Latvia Introduction of Super Reduced 5% VAT rate
Norway Reduced VAT rate increased to 12%
Switzerland VAT rate cut to 7.7%

A permanent 15% minimum VAT rate is being consulted by the EU

An ongoing European Union consultation on a draft Directive that would make permanent the provision in the EU VAT Directive that requires all Member States to levy a minimum standard VAT rate of at least 15%.

In the absence of the measure, the provisional control would be repealed as from 1st January, 2018, facilitating Member States to possibly lower their value-added tax rates to any level. The restriction is intended to avoid aggressive tax competition between EU Member States in the area of value-added tax.

The present-day lowest rate of value-added tax in the European Union is Luxembourg’s, at 17%. It was raised from 15% after the 1st January, 2015, change to EU VAT place of supply rules for broadcasting, telecommunication, and electronic services to the location of the consumer, in a move also envisioned to avert aggressive tax competition between Member States for companies selling electronic services to consumers in other Member States.

The consultation, which will run until the 13th February, 2018, covers the plan for a Council Directive amending Directive 2006/112/EC on the common system of value added tax, with regard to the obligation to respect a minimum standard rate, as set out in Article 97.

The most recent proposal to make permanent the restriction, first established temporarily in 1996 and extended regularly since, comes amid a wider review intended to relax restrictions on Member States’ ability to set their own rates of value-added tax on different goods and services. That work is part of the improvement for a definitive VAT regime for the European Union centred on taxation in the location of the consumer. The Commission has said it is appropriate as part of that process to set a long-lasting minimum rate of 15% for Member States’ VAT regimes.

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