EU agrees VAT relief for vaccines and testing kits

TNT Newsline December 7, 2020 123

Public health | European Commission

The Commission has welcomed the adoption of important new measures which will enable member states to relieve EU hospitals, medical practitioners and individuals of VAT when acquiring coronavirus vaccines and testing kits.

The new rules, adopted unanimously by all member states and based on a Commission proposal of 28 October (as part of the Communication on additional COVID-19 response measures), are designed to give better and cheaper access to the tools needed to prevent, detect and treat coronavirus.

Economy Commissioner Paolo Gentiloni  said: “The agreement will help ensure that coronavirus vaccines can be acquired VAT-free throughout the EU. I congratulate all involved for the extremely swift adoption of the new rules, which will help make both vaccines and testing kits cheaper. The successful roll-out of these vaccines is crucial for Europe to emerge from the shadow of the pandemic: it will be the number one priority for the coming months.”

The measures will allow EU countries to put in place a temporary VAT exemption for vaccines and testing kits being sold to hospitals, doctors and individuals, as well as closely related services. Currently, member states can apply reduced VAT rates on sales of vaccines but cannot apply a zero rate, while testing kits cannot benefit from reduced rates. Under the amended Directive, member states will be able to apply either reduced or zero rates to both vaccines and testing kits if they so choose.

The coronavirus pandemic has demanded an extraordinary response from authorities in all policy areas. The Commission is now intensifying work to prepare for the roll-out of new vaccines in the EU – in particular following recent ground-breaking announcements by global pharmaceutical players.

EU taxation and customs policy will continue to play an integral role in providing access to these crucial medical supplies, while also ensuring the safety of the goods that reach the internal market.

Next steps

To allow an immediate response from Member States, the rules will apply from the day after their publication in the Official Journal of the European Union. They will remain in place until the end of 2022, or until an agreement is reached on the Commission’s pending proposal for new rules on VAT rates, if the latter occurs earlier. (Agency report)

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