On June 20, 2017 the Dutch Minister of Finance sent the Dutch House of Representatives a summary of the discussions that have been held during the EuroGroup meeting of June 15 and the ECOFIN Council of June 16, 2017. During the ECOFIN Council a.o. the topics of a reduced VAT rate for electronic publications and the possibility for Member States to apply a general reverse charge mechanism for VAT in order to combat VAT fraud were on the agenda. After the ECOFIN Council no press release were released in this respect, which might have made some people wonder what happened with respect to these topics. In his letter of June 20, 2017 provides a very high-level insight in what happened in the discussions in ECOFIN Council.
Reduced VAT rate for electronic publications
In this respect in the Agenda of the meeting it was stated that the Council would be invited to agree on the proposal for a directive that aims to amend the current EU VAT rules in order to allow e-publications to benefit from reduced VAT rates, at the discretion of the member states.
In his letter from June 20 the Dutch Minister of finance states a.o. that during the ECOFIN Council a short discussion took place regarding the proposal that provides Member States with the possibility to apply a reduced VAT to electronic publications. According to the Dutch Minister of Finance, the Czech Republic indicated that at this moment they could not yet support the proposal. Therefore the necessary unanimity could not be achieved.
VAT reverse charge mechanism
In this respect in the Agenda of the meeting it was stated that the Council would be invited to agree its general approach on a proposal for a Council directive that would allow a temporary application of a generalized VAT reverse charge mechanism, in derogation from the from the main general principles of the EU's current VAT system.
The application of the mechanism will be voluntary for member states and granted under certain conditions for domestic transactions between businesses involving services or goods with an invoice exceeding €10 000.
In his letter from June 20 the Dutch Minister of finance states a.o. that during the ECOFIN Council a short discussion took place. According to the Dutch Minister during the meeting France and Slovenia indicated that the have objections of principle with the proposal. Therefore also in this respect the necessary unanimity could not be achieved. According to the Dutch Minister several Member States, including the Netherlands, strongly insisted on reaching a compromise on both this dossier and the dossier of e-publications.
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