Other pandemic-related VAT exemptions
The Council is allowing tax exemptions in cases of free allocations.
UM – 07/2021
On July 13, the Council agreed that further
products and services imported by EU institutions in response to the
coronavirus pandemic would no longer be subject to VAT. In principle, only
goods and services that are strictly intended for official use by the
purchasing body will be exempt from VAT. Those purchases that were procured as
a result of the coronavirus crisis will now be "reduced” as well. This
exemption will also apply when they are passed on free-of-charge to other
member states.
Maximising benefits
EU
Directive 2021/1159 issued on July 13, 2021 amends the VAT Directive (2006/112/EU) accordingly. The EU will then use its financial
instruments to support the EC and EU agencies and bodies in tackling
emergencies. The EC has stated that measures related to the coronavirus crisis
should not be hampered by the loss of valuable resources. The EU budget must be
used in the best possible way to overcome the serious consequences of the
pandemic. Nor should the task be made more difficult because the responsible
authorities are unable to collect VAT.
Retroactive tax exemption
The exemption will apply retroactively from
January 1, 2021 in order to cover measures already in progress, such as those
launched under the Emergency Support Instrument (ESI). Necessary corrections
should be made in the VAT declarations. The new exemptions will apply up to the
point in time when the crisis situation caused by the COVID-19 pandemic is
resolved. They will come into force on their publication in the EU’s Official
Gazette on July 15, 2021.
Previous tax relief
Pandemic-related amendments to the VAT
Directive were also made last year. EU
Directive 2020/2020 of December 7, 2020 also introduced temporary measures
for COVID-19 vaccines and in vitro diagnostics such as tests or laboratory
reagents and it allowed tax exemptions or reduced tax rates to be applied. Back
in April, member states were allowed to temporarily exempt products for
combating the effects of the COVID-19 outbreak, which included in vitro
diagnostic medical devices, from VAT and import duties. However, this EU Decision 2020/491 only covered imported supplies and not inter-community
supplies or domestic supplies. It was also due to expire on July 31, 2020.