Proposal for a COUNCIL DIRECTIVE amending Council Directive 2006/112/EC as regards temporary measures in relation to value added tax for COVID-19 vaccines and in vitro diagnostic medical devices in response to the COVID-19 pandemic
Date: 2020-10-28
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: EU Member State, VAT, coronavirus disease, epidemic, medical device, provision of services, tax collection, tax exemption, tax relief, vaccine

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   EUROPEAN COMMISSION  Brussels, 28.10.2020  COM(2020) 688 final 2020/0311 (CNS)  Proposal for a COUNCIL DIRECTIVE amending Council Directive 2006/112/EC as regards temporary measures in relation to value added tax for COVID-19 vaccines and in vitro diagnostic medical devices in response to the COVID-19 pandemic  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The current  initiative aims  at  enabling Member  States to  temporarily  exempt the supply of 
COVID-19 vaccines and in vitro diagnostic medical devices (testing kits) as well as services 
closely linked to such vaccines and such devices from value added tax (VAT). It also enables 
Member  States,  as  is  already  the  case  for  vaccines,  to  apply  a  reduced  VAT  rate  to 
COVID-19 in vitro diagnostic medical devices and closely linked services.  

On  30 January  2020,  the  World  Health  Organization  (WHO)  declared  the  COVID-19 
outbreak as a public health emergency of international concern. Then, on 11 March 2020, the 
WHO  characterised  the  situation  of  the  COVID-19  outbreak  as  a  pandemic.  Since  the 
beginning of the COVID-19 outbreak, the European Union has taken unparalleled action to 
protect lives and livelihoods and limit the impact of the virus on the economy. The Union is 
leading  the  global  effort  for  universal  testing,  treatment  and  vaccination  by  mobilising 
resources  through  international  pledging  and  by  joining  forces  with  countries  and  global 
health  organisations 
to  COVID-19  Tools  (ACT)  Accelerator 
collaborative framework1.  

the  Access 

through 

The latter was launched on 24 April 2020 by the WHO and a group of global actors. It is a 
call  for  action  in  a  landmark  global  collaboration  aiming  at  accelerating  equitable  global 
access  to  safe,  quality,  effective,  and  affordable  COVID-19  diagnostics,  therapeutics  and 
vaccines.  On 4 May 2020,  Commission  President von der  Leyen launched the Coronavirus 
Global  Response  as  the  Union’s  response  to  this  call  for  action.  In  the  Commission 
President’s words, “[t]he world will only be freed from this pandemic when vaccines, testing 
kits and treatments are available and affordable to everyone who needs them”. The pledging 
campaign under the Coronavirus Global Response has raised almost EUR 16 billion to date, 
including  EUR 11.9 billion  pledged  by  the  Member  States,  the  Commission  and  the 
European Investment Bank.  

On 18 September 2020, the Commission confirmed its participation in the COVAX Facility, 
following  the  announcement,  on  31 August  2020,  of  a  EUR 400 million  contribution  in 
guarantees  to  support  COVAX  and  its  objectives  in  the  context  of  the  Coronavirus  Global 
Response. The COVAX Facility is  the vaccines  pillar of the ACT  Accelerator  and aims to 
speed  up  development  and  manufacture  of  COVID-19  vaccines  and  to  guarantee  fair  and 
equitable access for every country in the world.  It is co-led by Gavi, the Vaccine Alliance, 
the Coalition for Epidemic Preparedness Innovations (CEPI) and WHO.  

As  part  of  the  effort  to  help  protect  people  everywhere  in  the  world,  and  in  the  Union  in 
particular,  the  Commission  put  forward  on  17 June  2020  an  EU  strategy  for  COVID-19 
vaccines2.  The  proposed  EU  approach  to  secure  vaccines  for  EU  people  complements  the 
Union’s  action  for  universal  access  to  affordable  coronavirus  vaccination,  treatment  and 
testing. The aim is to accelerate the development, manufacturing and deployment of vaccines 
against the virus and make sure that in the fight  against COVID-19 no one in the Union is 
left behind.  

1 
2 

https://www.who.int/who-documents-detail/access-to-covid-19-tools-(act)-accelerator 
Communication from the Commission to the European Parliament, the European Council, the Council 
and the European Investment Bank - EU Strategy for COVID-19 vaccines, COM(2020) 245 final of 17 
June 2020. 

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The EU vaccine strategy has among its objectives to ensure equitable and affordable access 
to the supplies of COVID-19 vaccines for all EU people as early as possible. Generally, an 
effective and safe vaccine against COVID-19 is seen as the most likely permanent solution to 
the  pandemic,  as  it  will  facilitate  control  of  COVID-19  disease  and  will  reduce  mortality. 
However,  there  is  no  guarantee  that  such  vaccine  will  be  available  soon.  Therefore,  the 
development  and  deployment  of  COVID-19  in  vitro  diagnostic  medical  devices  remain 
crucial.  

The Commission will implement the EU strategy for COVID-19 vaccines together with the 
Member States. This increases the likelihood that all in the EU, as well as in the European 
Economic Area (EEA), gain equitable and affordable access to those vaccines in the shortest 
possible  period.  An  important  step  towards  joint  action  between  Member  States  has  been 
taken  by  the  creation  of  an  inclusive  Vaccine  Alliance  by  France,  Germany,  Italy,  and  the 
Netherlands. This alliance was formed to pool the national resources of those countries and 
secure fair access to vaccine supplies for the European population.  

The  Union  will  materialise  its  strategy  for  COVID-19  vaccines  in  two  ways.  First,  by 
securing sufficient production of vaccines in the EU - and thereby sufficient supplies for its 
Member  States  -  through  Advance  Purchase  Agreements  (APAs)  with  vaccine  producers. 
The related funding will come from  the Emergency Support  Instrument  (ESI3). Second, by 
making  use  of  existing  regulatory,  financial,  advisory  and  other  tools  at  its  disposal  while 
adapting the Union’s regulatory framework to the current urgency. 

The contracts  with  vaccine producing  companies will be  concluded through  a procurement 
process run by the Commission on behalf of all participating Member States. Once any of the 
vaccines  supported  proves  successful,  Member  States  will  be  able  to  acquire  that  vaccine 
directly  from  the  producer  based  on  the  conditions  laid  down  in  the  APA.  As  the  ultimate 
acquirers of the vaccines, Member States will participate in the process from the outset. 

In the framework of the EU vaccine strategy, the Commission already concluded agreements 
to  purchase  potential  COVID-19  vaccines  with  some  pharmaceutical  companies,  while 
exploratory talks intended to result in APAs have been concluded or will be conducted with 
others. On 30 September 2020, the WHO issued a draft landscape document of COVID-19 
candidate vaccines4, listing 41 candidate vaccines in clinical evaluation.  

Since  the  emergence  of  the  COVID-19  pandemic  and  awaiting  a  vaccine,  healthcare 
professionals have created numerous tests. These tests detect either the presence of the virus 
or the presence of antibodies against the virus. The most common COVID-19 tests marketed 
on the European market are as follows: 

 

 

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Nucleic acid test (e.g. PCR), primarily involving a swab of the nose and throat. The 
presence of the virus is then detected in the sample taken. 

Antigen test, also involving a swab of the nose and throat. This test also detects the 
presence of the virus. 

– 

There are “rapid” antigen tests, where the sample is placed on a plate and the 
result appears after a few minutes. 

Council Regulation (EU) 2016/369 of 15 March 2016 on the provision of emergency support within the 
Union  as  amended  by  Council  Regulation  (EU)  2020/521 of  14 April  2020  activating  the  emergency 
support  under  Regulation  (EU)  2016/369,  and  amending  its  provisions  taking  into  account  the 
COVID-19 outbreak (OJ L 117, 15.4.2020, p. 3). 
https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines 

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– 

There are also ELISA (enzyme-linked immunosorbent assay) or “ELISA-like” 
tests which are more complex but offer a more reliable and qualitative method. 

 

Antibody test (IgG/IgM/IgA) via a blood sample. This test makes it possible to detect 
antibodies  against  the  virus  in  the  sample  taken.  Antibody  tests  can  also  be 
performed via “rapid” tests, or via ELISA or “ELISA-like” tests. 

Member  States  are  responsible  for  the  strategy  and  criteria  to  determine  which  people  are 
tested and what types of COVID-19 in vitro diagnostic medical devices are deployed. 

In the face of the COVID-19 pandemic, the Commission  has taken exceptional  measures in 
the area of VAT to help victims of the outbreak. On 3 April 2020, the Commission adopted 
Decision  (EU)  2020/4915  enabling  Member  States  to  temporarily  exempt  from  VAT  (and 
relieve  from  customs  duties)  vital  goods  needed  to  combat  the  effects  of  the  COVID-19 
outbreak  (covering  among  other  personal  protective  equipment,  in  vitro  diagnostic  medical 
devices, medical devices such as ventilators and a limited number of medicines6).  

This decision covers only importation and not intra-Community or domestic supplies, because 
the  autonomous  powers  of  the  Commission  are  limited  to  this  field.  The  initial  measure 
applied for a period of six months, and was further extended by three months until 31 October 
20207. A further prolongation until the end of April 2021 has been decided.  

The current VAT rules contain two main tools that already allow Member States to alleviate 
the cost of COVID-19 vaccines and in vitro diagnostic medical devices.  
First,  Council  Directive  2006/112/EC8  (the  VAT  Directive)  provides  exemptions  without 
deductibility  for  hospital  and  medical  care9.  The  objective  of  those  exemptions  is  to  reduce 
the  cost  of  medical  care  and  to  make  it  more  accessible  to  individuals.  Preventive  medical 
care, e.g. when the person concerned is not suffering from any disease or health disorder, may 
fall under the exemption. This would apply with regard to COVID-19 vaccination and testing 
supplied  by  way  of  hospital  and  medical  care.  However,  the  existing  exemption  would  not 
apply to the supply of COVID-19 vaccines and in vitro diagnostic medical devices - including 
services  closely  linked  thereto  -  to  hospitals,  medical  practitioners,  centres  for  medical 
treatment  or  diagnosis  and  other  duly  recognised  establishments  of  a  similar  nature.  They 
would  thus  be  burdened  with  the  VAT  cost  when  acquiring  such  vaccines  and  in  vitro 
diagnostic medical devices.  

Hence,  although  COVID-19  vaccination  and  testing  supplied  in  the  context  of  hospital  and 
medical care would be exempt from VAT, supplies of such vaccines and in vitro diagnostic 
medical devices acquired by hospitals, medical practitioners, centres for medical treatment or 
diagnosis and other duly recognised establishments of a similar nature would not be covered 
by this exemption. Therefore, the VAT burden would remain for those. 

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Commission Decision (EU) 2020/491 of 3 April 2020 on relief from import duties and VAT exemption 
on importation granted for goods needed to combat the effects of the COVID-19 outbreak during 2020 
(OJ L 103 I, 3.4.2020, p. 1). 
See indicative list of goods covered on https://ec.europa.eu/taxation_customs/sites/taxation/files/03-04-
2020-import-duties-vat-exemptions-on-importation-covid-19-list-of-goods.pdf 
Commission  Decision  (EU)  2020/1101  of  23 July  2020  amending  Decision  (EU)  2020/491  on  relief 
from import duties and VAT exemption on importation granted for goods needed to combat the effects 
of the COVID-19 outbreak during 2020 (OJ L 241, 27.7.2020, p. 36).  
Council  Directive  2006/112/EC  of  28 November  2006  on  the  common  system  of  value  added  tax 
(OJ L 347, 11.12.2006, p. 1), as amended. 
Article 132(1)(b) and (c) of the VAT Directive. 

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Second, under the current VAT rules, Member States may apply a reduced (that is, no lower 
than 5%) VAT rate to “pharmaceutical products normally used for health care, prevention of 
illnesses  and  as  treatment  for  medical  […]  purposes”10.  The  concept  of  "pharmaceutical 
products"  is  not  defined  in  the  VAT  Directive  but  has  always  been  understood  to  cover 
pharmaceutical  products  as  defined  by  the  Combined  Nomenclature11.  The  pharmaceutical 
products contained in the Combined Nomenclature (Chapter 30) include vaccines. Therefore, 
vaccines are currently eligible for reduced VAT rates. Moreover, based on historical standstill 
derogations, certain Member States may continue to apply super-reduced rates (namely lower 
than 5%) or exemptions with the deductibility of the VAT paid at the preceding stage (zero 
rate) to pharmaceutical products, including vaccines. However, there is no general provision 
in the VAT Directive allowing a zero rate to pharmaceutical products that could apply in the 
case of COVID-19 vaccines.  

In contrast to vaccines, the general VAT rules of the VAT Directive would not allow reduced 
rates to apply to COVID-19 in vitro diagnostic medical devices12. Moreover, while Decision 
(EU) 2020/491 enabled Member States to temporarily exempt from VAT the importation of in 
vitro diagnostic medical  devices among other, there is no explicit provision in the EU VAT 
rules  allowing  to  exempt  from  VAT  the  intra-Community  and  domestic  supply  of  such 
devices.  

In conclusion, although the current VAT rules allow partly alleviating the cost of COVID-19 
vaccination and testing, they do not permit the application of a zero rate to such vaccines and 
services  closely  linked  thereto.  Likewise,  they  do  not  permit  the  application  of  either  a 
reduced or a zero rate to in vitro diagnostic medical devices, including services closely linked 
thereto. The 2018 Commission proposal13 to amend the VAT Directive as regards VAT rates, 
which is pending before the Council, could provide a satisfactory solution in lifting VAT from 
the overall supply of COVID-19 vaccination and testing. If adopted unanimously by Council, 
it  would  allow  Member  States  to  apply  a  reduced  rate  or  even  a  zero  rate  to  supplies  of 
COVID-19 vaccines and in vitro diagnostic medical devices, including services closely linked 
thereto,  if  such  supplies  benefit  only  the  final  consumer  and  pursue  an  objective  of  general 
interest.  

However, there is a need for immediate action in fighting the pandemic. Given the urgency, a 
swift  adaptation  of  the  EU  VAT  rules  is  necessary  in  order  to  ensure  that  COVID-19 
vaccines and in vitro diagnostic medical devices become more affordable for Europeans by 
reducing  their  cost  of  provision  by  the  health  system,  thus  enhancing  the  potential  for 
COVID-19 prevention and screening in the Union. This is a prerequisite for ensuring that full 
societal and economic activity may be restored in the near term.  

It  is  imperative  that  such  measure  be  of  temporary  character  with  the  aim  to  exempt  from 
VAT the supply of COVID-19 vaccines and in  vitro diagnostic medical  devices while also 
allowing  a  reduced  VAT  rate  for  the  latter.  This  measure  should  remain  in  place  until  the 
COVID-19 health crisis comes to an end. In concrete terms, the measure in question should 
not  go  beyond  31 December  2022.  Before  the  end  of  this  period,  the  situation  will  be 
reviewed and, if necessary, the period of application of the measure may be extended. 

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Category 3  of  Annex III  to  the  VAT  Directive  ‘List  of  supplies  of  goods  and  services  to  which  the 
reduced rates referred to in Article 98 may be applied’. 
Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on 
the Common Customs Tariff (OJ L 256, 7.9.1987, p. 1), as currently in force. 
In vitro diagnostic medical devices are not included in any of the categories of Annex III to the VAT 
Directive.  
Proposal for a Council Directive amending Directive 2006/112/EC as regards rates of value added tax, 
COM(2018) 20 final of 18 January 2018. 

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Pursuant  to  Article 94(2)  of  the  VAT  Directive,  the  potential  reduced  rate  and  the  VAT 
exemption  in  the  form  of  zero  rate  applied  to  the  above  supplies  within  the  territory  of  a 
Member State will also be applicable to the intra-Community supply to  or importation into 
that Member State of COVID-19 vaccines and in vitro diagnostic medical devices.  

• 

Consistency with existing policy provisions in the policy area 

The  proposal  complements  Commission  Decision  (EU)  2020/491  of  3 April  2020  on  relief 
from import duties and VAT exemption on importation granted for goods needed to combat 
the effects of the COVID-19 outbreak during 2020, which is to be extended until the end of 
April 2021. It is also in line with the 2018 Commission proposal to amend the VAT Directive 
as regards VAT rates, which is pending before the Council.  

• 

Consistency with other Union policies 

The proposal is consistent with the EU public health policy, in particular the EU strategy for 
COVID-19 vaccines. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The legal basis of the proposal is Article 113 of the Treaty on the Functioning of the EU. This 
Article provides for the Council, acting unanimously in accordance with a special legislative 
procedure  and  after  consulting  the  European  Parliament  and  the  Economic  and  Social 
Committee, to adopt provisions for the harmonisation of Member States’ rules in the area of 
indirect taxation. 

• 

Subsidiarity (for non-exclusive competence)  

According to the principle of subsidiarity, as set out in Article 5(3) of the Treaty on European 
Union,  action  at  Union  level  may  only  be  taken  if  the  envisaged  aims  cannot  be  achieved 
sufficiently by the Member States alone and can therefore, by reason of the scale or effects of 
the  proposed  actions,  be  better  achieved  by  the  EU.  The  current  VAT  Directive  prevents 
Member  States  from  applying  a  reduced  VAT  rate  to  the  supply  of  COVID-19  in  vitro 
diagnostic medical devices as well as a zero VAT rate to the supply of COVID-19 vaccines 
and  in  vitro  diagnostic  medical  devices.  A  legislative  initiative  at  EU  level  to  amend  the 
Directive is the most efficient way to ensure equitable and affordable access to the supplies of 
these vaccines and in vitro diagnostic medical devices for all EU people as early as possible. 

• 

Proportionality 

The  proposal  has  a  limited  scope  and  is  of  temporary  character.  It  is  consistent  with  the 
principle of proportionality because it does not go beyond what is necessary and proportionate 
for achieving the intended objective. It solely grants Member States the possibility to apply a 
reduced VAT rate to the supply of COVID-19 in vitro diagnostic medical devices and a zero 
rate  to  the  supply  of  COVID-19  vaccines  and  in  vitro  diagnostic  medical  devices.  The 
decision to  set  such rates remains under the discretion and responsibility of Member States. 
The  initiative  would  prevent  Member  States  from  violating  the  VAT  Directive  were  the 
supplies  at  issue  to  be  granted  a  reduced  or  a  zero  rate,  as  many  Member  States  are 
envisaging. 

• 

Choice of the instrument 

A Directive is required to amend the current VAT Directive.  

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3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

No stakeholder consultation has been conducted, due to the urgent character of this initiative, 
presented in the context of the COVID-19 pandemic.  

• 

Collection and use of expertise 

The  Commission  has  relied  on  the  information  publicly  available  on  the  epidemiological 
situation as well as relevant available scientific evidence with regard to COVID-19 vaccines 
and in vitro diagnostic medical devices.  

• 

Impact assessment 

No  separate  impact  assessment  has  been  conducted,  due  to  the  urgent  character  of  this 
initiative, presented in the context of the COVID-19 pandemic14. 

• 

Fundamental rights 

Health is a fundamental human right. The proposal is consistent with Article 168 of the Treaty 
on  the  Functioning  of  the  European  Union  stipulating  that  a  high  level  of  human  health 
protection  shall  be  ensured  in  the  definition  and  implementation  of  all  Union  policies  and 
activities. Moreover, it is consistent with Article 35 of the EU Charter of Fundamental Rights, 
which stipulates that everyone has the right of access to preventive health care and the right to 
benefit  from  medical  treatment  under  the  conditions  established  by  national  laws  and 
practices.  

4. 

BUDGETARY IMPLICATIONS 

Under the rules currently in force for the VAT Own Resource, the proposal has no negative 
impact on the Union budget, as the reduction in VAT revenues will be offset by a correction 
in  the  base.  However,  under  the  new  simplification  system,  which  is  expected  to  enter  into 
force in 2021, the proposal would most likely have a financial impact on the EU budget. 

5. 

• 

OTHER ELEMENTS 

Explanatory documents (for directives) 

The proposal does not require Explanatory Documents on the transposition. 

• 

Detailed explanation of the specific provisions of the proposal 

The  proposal  aims  at  amending  the  VAT  Directive  by  adding  Article 129a  to  the  end  of 
Chapter 5 ‘Temporary provisions’ of Title VIII: Rates.  

Article 129a  will  enable  Member  States  to  grant  an  exemption  with  deductibility  of  VAT 
paid at the preceding stage (zero rate) in respect of the supply of COVID-19 vaccines and in 
vitro diagnostic medical devices, including services closely linked to such vaccines and such 
devices.  It  will  also  allow  Member  States,  as  is  already  the  case  for  vaccines,  to  apply  a 
reduced  VAT  rate  to  COVID-19  in  vitro  diagnostic  medical  devices  and  closely  linked 

14 

See,  however,  the  impact  assessment  that  accompanied  the  2018  proposal  (SWD(2018) 7 final)  on 
https://ec.europa.eu/transparency/regdoc/rep/10102/2018/EN/SWD-2018-7-F1-EN-MAIN-PART-
1.PDF. 

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services. Only COVID-19 in vitro diagnostic medical devices to which the CE marking may 
be affixed and COVID-19 vaccines authorised by the Commission or by Member States will 
be eligible for a zero rate (and a reduced rate as regards in vitro diagnostic medical devices). 
‘CE  marking’  means  a  marking  by  which  the  manufacturer  indicates  that  a  device  is  in 
conformity  with  the  applicable  requirements  set  out  in  Union  harmonisation  legislation 
providing for its affixing15.  

The  possibility  to  reduce  or  waive  VAT  from  the  supply  of  the  above  services  should  be 
limited  in  time  to  cover  only  the  period  of  exceptional  circumstances  caused  by  the 
COVID-19  pandemic.  In  concrete  terms,  it  should  not  go  further  than  31 December  2022. 
Before the end of this period, the situation will be reviewed and, if necessary, the period of 
application of the measure may be extended. However, if the 2018 Commission proposal on 
the reform of the VAT rates’ system is adopted, it will allow Member States the possibility to 
grant  a  zero  rate  in  respect  of  the  supply  of  COVID-19  vaccines  and  in  vitro  diagnostic 
medical  devices  including  services  closely  linked  thereto.  Therefore,  in  the  event  that  the 
2018  proposal  is  adopted  and  the  date  from  which  the  national  provisions  necessary  to 
comply  with  the  amended  VAT  Directive  are  to  apply  is  earlier  than  the  end  of  the 
COVID-19  pandemic,  Article 129a  would  be  deprived  of  its  rationale  when  those  national 
provisions become applicable.  

2020/0311 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Council Directive 2006/112/EC as regards temporary measures in relation to 
value added tax for COVID-19 vaccines and in vitro diagnostic medical devices in 
response to the COVID-19 pandemic 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 113 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Parliament16,  
Having regard to the opinion of the European Economic and Social Committee17,  

Acting in accordance with a special legislative procedure, 

Whereas: 

15 

16 
17 

Notably Regulation (EU) 2017/745 of the European Parliament and of the Council of 5 April 2017 on 
medical devices, amending Directive 2001/83/EC, Regulation (EC) No 178/2002 and Regulation (EC) 
No 1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC (OJ L 117, 5.5.2017, p. 1). 
OJ C , , p. . 
OJ C , , p. . 

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(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

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21 

On 30 January 2020, the World Health Organization (WHO) declared the COVID-19 
outbreak  as  a  public  health  emergency  of  international  concern.  On  11 March  2020, 
the WHO characterised the situation of the COVID-19 outbreak as a pandemic.  

The  Union  has  joined  forces  with  the  WHO  and  a  group  of  global  actors  in  an 
unprecedented  effort  of  global  solidarity  to  fight  the  pandemic.  That  effort  aims  to 
support  the  development  and  equitable  distribution  of  in  vitro  diagnostic  medical 
devices  (testing  kits),  treatments  and  vaccines  required  to  control  and  combat 
COVID-19. 

In  view  of  the  alarming  increase  in  the  number  of  COVID-19  cases  in  the  Member 
States, the Commission has come up with  an EU strategy for COVID-19 vaccines18. 
The  aim  of  that  strategy  is  to  accelerate  the  development,  manufacturing  and 
deployment of vaccines against the virus to help protect people in the Union. While an 
effective and safe vaccine against COVID-19 is the most likely permanent solution to 
the pandemic, testing is indispensable to contain the pandemic.  

In the area of value added tax (VAT), the Commission has taken exceptional measures 
to help victims of the pandemic. On 3 April 2020, the Commission adopted Decision 
(EU)  2020/49119  enabling  Member  States  to  temporarily  exempt  from  VAT  and 
customs  duties  vital  goods  needed  to  combat  the  effects  of  the  COVID-19  outbreak, 
including  COVID-19  in  vitro  diagnostic  medical  devices.  However,  Decision  (EU) 
2020/491 covers only importation and not intra-Community or domestic supplies. 
Council  Directive  2006/112/EC20  contains  tools  allowing  Member  States  to  partly 
alleviate  the  cost  of  COVID-19  vaccination  and  testing,  notably  through  the  VAT 
exemption without deductibility for hospital and medical care under Article 132(1)(b) 
and  (c)  of  that  Directive  and  the  reduced  VAT  rate  available  for  vaccines  under 
Article 98 of that Directive. However, Directive 2006/112/EC does not allow Member 
States  to  apply  a  reduced  VAT  rate  to  the  supply  of  COVID-19  in  vitro  diagnostic 
medical devices as well as to services closely linked to such devices. Neither does it 
allow  Member  States  to  grant  an  exemption  with  deductibility  of  VAT  paid  at  the 
preceding stage (zero rate) in respect of the supply of COVID-19 vaccines and in vitro 
diagnostic  medical  devices  as  well  as  in  respect  of  services  closely  linked  to  such 
vaccines and devices. 
The  2018  Commission  proposal21  to  amend  Directive  2006/112/EC  as  regards  VAT 
rates, currently pending before the Council, if adopted by Council, will allow Member 
States, under certain conditions, to apply amongst other a reduced rate to supplies of 
COVID-19 in vitro diagnostic medical devices as well as to services closely linked to 
such  devices.  Likewise,  that  proposal  will  allow  Member  States,  under  certain 
conditions, to introduce an exemption with deductibility of VAT paid at the preceding 
stage  (zero  rate)  to  supplies  of  COVID-19  vaccines  and  in  vitro  diagnostic  medical 
devices  as  well as  to  services closely linked to  such vaccines and devices.  The 2018 

Communication from the Commission to the European Parliament, the European Council, the Council 
and the European Investment Bank - EU Strategy for COVID-19 vaccines, COM(2020) 245 final of 17 
June 2020. 
Commission Decision (EU) 2020/491 of 3 April 2020 on relief from import duties and VAT exemption 
on importation granted for goods needed to combat the effects of the COVID-19 outbreak during 2020 
(OJ L 103 I, 3.4.2020, p. 1). 
Council  Directive  2006/112/EC  of  28 November  2006  on  the  common  system  of  value  added  tax 
(OJ L 347, 11.12.2006, p. 1). 
Proposal for a Council Directive amending Directive 2006/112/EC as regards rates of value added tax, 
COM(2018) 20 final of 18 January 2018. 

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(7) 

(8) 

(9) 

proposal will allow Member States to apply those rates, if such supplies benefit only 
the final consumer and pursue an objective of general interest.  

However, as the adoption of the 2018 proposal is still pending, it is necessary to take 
immediate  action  in  order  to  adapt  Directive  2006/112/EC  to  the  exceptional 
circumstances caused by the COVID-19 outbreak. The aim of such action is to ensure 
that the supply of COVID-19 vaccines and in vitro diagnostic medical devices become 
more affordable in the Union.  

To this end, Member States should have the possibility to apply a reduced VAT rate to 
the supply of COVID-19 in vitro diagnostic medical devices or to grant an exemption 
with  deductibility  of  VAT  paid  at  the  preceding  stage  (zero  rate)  in  respect  of  the 
supply  of  COVID-19  vaccines  and  in  vitro  diagnostic  medical  devices,  approved  as 
such by the Commission or by them, and services closely linked to such vaccines and 
devices.  

The possibility to apply a reduced VAT rate to COVID-19 in vitro diagnostic medical 
devices  or  to  exempt  from  VAT  the  supply  of  COVID-19  vaccines  and  in  vitro 
diagnostic  medical  devices,  as  well  as  services  closely  linked  to  such  vaccines  and 
devices, should be limited in time. That possibility should only be allowed during the 
period  of  exceptional  circumstances  caused  by  the  COVID-19  pandemic.  Due  to  the 
uncertainty of the duration of those exceptional circumstances, the possibility to apply 
a  reduced  VAT  rate  or  a  zero  rate  to  such  supplies  should  remain  in  place  until  31 
December 2022. Before  the end of this period, the situation will be reviewed and, if 
necessary, the applicability of the measure may be extended. 

(10)  Since the objective of this Directive to ensure more affordable access to the supplies of 
COVID-19  vaccines  and  in  vitro  diagnostic  medical  devices  in  the  Union  cannot  be 
sufficiently achieved by the Member States but can rather, by reason of the scale and 
effects of the action, be better achieved at Union level, the Union may adopt measures, 
in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on 
European Union. In accordance with the principle of proportionality as set out in that 
Article, this Directive does not go beyond what is necessary in order to achieve those 
objectives.  

(11)  Directive 2006/112/EC should therefore be amended accordingly, 

HAS ADOPTED THIS DIRECTIVE: 

Article 1 

The following Article 129a is inserted in Chapter 5 of Title VIII of Directive 2006/112/EC: 

1. 

(a) 

(b) 

Member States may take one of the following measures:  

‘Article 129a 

apply a reduced rate to the supply of COVID-19 in vitro diagnostic medical devices 
and services closely linked to those devices; 

grant an exemption with deductibility of VAT paid at the preceding stage in respect 
of the supply of COVID-19 in vitro diagnostic medical devices and services closely 
linked to those devices.  

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Only COVID-19 in vitro diagnostic medical devices that are in conformity with the applicable 
requirements  set  out  in  Regulation  (EU)  2017/745  of  the  European  Parliament  and  of  the 
Council22  and  other  applicable  Union  harmonisation  legislation  shall  be  eligible  for  the 
reduced rate or the exemption provided for in the first subparagraph.  

Member  States  may  grant  an  exemption  with  deductibility  of  VAT  paid  at  the 
2. 
preceding stage in respect of the supply of COVID-19 vaccines and services closely linked to 
those vaccines.  

Only  COVID-19  vaccines  authorised  by  the  Commission  or  by  Member  States  shall  be 
eligible for the exemption provided for in the first subparagraph.  

3. 

Paragraphs 1 and 2 shall apply until 31 December 2022.’.  

Article 2 

Where Member States decide to apply a reduced rate or grant an exemption referred to 
1. 
in Article 1 and adopt the laws, regulations and administrative provisions necessary to bring 
into  force  this  Directive,  those  provisions  shall  contain  a  reference  to  this  Directive  or  be 
accompanied by such a reference on the occasion of their official publication. Member States 
shall determine how such reference is to be made. 

2. 
Member States shall communicate to the Commission the text of the main provisions 
of  national  law  which  they  adopt  in  the  field  covered  by  this  Directive  within  two  months 
from their adoption 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 3 

This Directive is addressed to the Member States. 

Done at Brussels, 

Article 4 

For the Council 
The President 

22 

Regulation (EU) 2017/745 of the European Parliament and of the Council of 5 April 2017 on medical 
devices,  amending  Directive  2001/83/EC,  Regulation  (EC)  No  178/2002  and  Regulation  (EC)  No 
1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC (OJ L 117, 5.5.2017, p. 1). 

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