Finland questions EU VAT rate reforms

Thu 15th Mar 2018

The Finnish government has questioned European Union proposal to allow member states more control of their reduced VAT rates.

The Finish Ministry of Finance is concerned that this would lead to intra-state competitive tax cuts. Also, potentially, a highly complex system with many variations on rates for the same products and services across the EU states. This could impede the efficient operation of the Single Market, and increase the VAT compliance burden. Finland also does not support the proposed negative list concept of supplies which cannot benefit from reduced rates.
The EU proposed in January to free up the reduced rate regime, allowing states effectively full control over the reduced rates they apply. Presently, states may only reduce rates on goods or services listed in the EU VAT Directive, Annex III. This fixed regime has created negative publicity in some countries as it has restricted changes to products such as e-books, women sanitary products and green, energy-saving products.

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