On March 10, 2017 the Dutch Minister of Finance sent an annotated agenda for the following Eurogroup and Economic and Financial Affairs (ECOFIN) Council to the Dutch House of Representatives. These meetings will take place on March 20, 2017 (Eurogroup) and on March 21, 2017 (ECOFIN Council). According to the annotated agenda several tax/VAT topics will be discussed during the ECOFIN Council of March 21, 2017.

Reduced VAT rate for e-publications

According to the Dutch Minister during the ECOFIN Council parties will have an exploratory discussion on the proposal that creates the possibility for Member States to apply a reduced VAT rate on e-books, e-newspapers and e-magazines.

In the VAT Directive it is determined that the standard VAT rate cannot be lower than 15%. Annex III to the VAT Directive provides the possibility to make an exception for certain categories. For the categories mentioned in this Annex, Member States can opt to apply a reduced VAT rate (with a minimum VAT rate of 5%). One of these categories mentioned in Annex III for which Member States can opt to apply a reduced VAT rate is: “Supply, including on loan by libraries, of books on all physical means of support (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising”.

However, for electronic services, including electronic publications, such exception doesn’t exist and therefore the standard VAT rate has to be applied to such services. The proposal being discussed creates the possibility to make an exception for certain electronic services being the supply, including on loan by libraries, of books, newspapers and periodicals, other than material wholly or predominantly devoted to advertising and for as far as not wholly or predominantly consisting out of music or video. This would enable an equal VAT treatment of electronic and physical publications against the reduced VAT rate.

Based on derogations certain Member States are allowed to apply a reduced rate that is even lower than the minimum rate of 5% as determined in the VAT Directive to physical publications, what leads to inequality between Member States. In order to end this inequality the proposal furthermore creates the possibilities for all Member States to apply a strongly reduced VAT rate or a zero rate to all physical and electronic publications. This would enable all Member States to apply the same VAT rate to physical and electronic publications.

A temporarily application of a general reverse charge mechanism

According to the Dutch Minister of Finance the ECOFIN Council is expected to have exploratory discussions regarding a proposal for a temporarily application of a general reverse charge mechanism to the supply of certain goods and service exceeding a certain threshold.

The proposal will allow Member States that meet certain conditions to temporarily apply a general reverse charge mechanism for VAT due on domestic B2B supplies of goods and services with an invoice amount exceeding 10.000. According to the Dutch Minister the proposal regards a temporary measure that will be in place until June 30, 2022.

Click here to download the annotated agenda for the March 20, 2017 Eurogroup meeting and the March 21, 2017 ECOFIN Council as sent to the Dutch House of Representatives by the Dutch Minister from the website of the Dutch Ministry of Finance. (The annotated agenda is only available in Dutch)

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