Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards exemptions on importations and on certain supplies, in respect of Union measures in the public interest
Date: 2021-04-12
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: VAT, coronavirus disease, crisis management, epidemic, goods and services, import (EU), provision of services, public health, tax exemption, tax relief

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   EUROPEAN COMMISSION  Brussels, 12.4.2021  COM(2021) 181 final 2021/0097 (CNS)  Proposal for a COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards exemptions on importations and on certain supplies, in respect of Union measures in the public interest  
 
EXPLANATORY MEMORANDUM 

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CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  current  initiative  aims  to  support  and  facilitate  measures  taken  at  Union  level  in  the 
public  interest,  in  particular  where  the  Union  is  acting  in  the  execution  of  a  mandate  to 
acquire  goods  and  services  in  order  to  distribute  them  free  of  charge  to  Member  States 
according to their emergency needs. These measures are - inter alia - aimed at the prevention 
of,  preparation  for  or  response  to  emergencies  in  the  context  of  current  or  future  crises  and 
disasters. The initiative supports  these measures  by eliminating value  added tax (VAT) as a 
cost factor as well as related compliance burden. More specifically, this proposal provides for 
an  exemption  from  VAT  of  goods  or  services  supplied  to  and  goods  imported  by  the 
Commission  or  an  EU  agency  or  body  where  the  Commission  or  any  such  agency  or  body 
acquires these goods or services in the fulfilment of a mandate conferred on them by Union 
law in the public interest.  

The ongoing COVID-19 pandemic shows to a particular degree the importance of being well 
prepared  and  being  able  to  respond  quickly  based  on  a  structured,  coherent  and  centralized 
approach at EU level. This conclusion also applies to other present and future situations that 
require coordinated action at Union level. Therefore, building on the experience with handling 
of the COVID-19 pandemic, this initiative aims to provide the European Union with a broad-
based  and  future-proof  solution.  The  objective  is  to  align  the  EU  VAT  provisions,  for 
example  in  respect  of  measures  in  the  field  of  disaster  and  crisis  management,  and  thus  to 
facilitate the activities of the Commission, the EU agencies or other EU bodies when fulfilling 
any mandate conferred on them by Union law. 

The  experience  gained  in  the  Commission  taking  emergency  measures  during  the  course  of 
the  COVID  19  pandemic  has  shown  that  the  VAT  charged  on  some  transactions  ends  up 
being a cost factor in procurement operations that strains limited budgets. Those amounts of 
VAT  reduce  the  volume  of  goods  and  services,  which  the  Commission  can  procure  for 
stockpiling  or  immediate  distribution  to  Member  States,  whilst  adding  complexity  and 
delaying  solidarity-based  operations  to  address  urgent  needs.  In  addition,  compliance  costs 
become  a  burden  for  businesses  who  are  providing  goods  and  services  to  the  Union, 
particularly as regards their registration with tax authorities in many or all Member States. 

There is therefore an urgent need for immediate action as regards the fight against the current 
COVID-19 pandemic and in order to create readiness to act with a view to comparable future 
measures  taken  at  Union  level  in  the  public  interest.  For  this  purpose,  a  broad-based  VAT 
exemption  for purchases made by the Commission or by  an EU agency  or body in  order to 
donate,  stockpile  or  otherwise  provide  goods  or  services  to  Member  States  or  third  parties 
should  be  introduced  since  that  is  the  appropriate  solution  required  to  facilitate  the 
coordination of measures at Union level.  

Based on the lessons learned from the COVID-19 pandemic and in order to provide a solution 
that is future-proof, the scope of this proposal is broad-based, covering all types of goods and 
services. As regards goods, it would for instance apply to medical countermeasures (MCMs) 
of all kind such as biologic products1, drugs and medicines2 as well as medical devices3. The 

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Such as vaccines, blood products or antibodies. 

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proposal would also cover non-medical items necessary for addressing humanitarian crises4. 
This proposal also covers a wide range of services with or without link to the health sector5. 

The eligible purpose for which these goods and services are put to use by the Commission or 
an EU agency or body is any activity in the fulfilment of a mandate conferred on them under 
Union  law  and  which  is  in  the  public  interest.  The  goods  or  services  acquired  may,  for 
example,  be  intended  to  be  made  available  free  of  charge  to  Member  States  or  to  a  third 
party6. They could also be part of a stockfiling strategy in view of future donations. 

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)  2020/4917  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 medicines8).  

This decision covers only importation and not intra-Community or domestic supplies, because 
the  autonomous  powers  of  the  Commission  are  limited  to  that  particular  field.  The  initial 
measure applied for a period of six months, and was further extended until 31 October 20209 
and 30 April 202110. A further extension is currently under preparation. 

On 7 December 202011, the Council adopted a proposal from  the Commission12  introducing 
an  amendment  to  Council  Directive  2006/112/EC13  (the  VAT  Directive)  and  allowing 

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Such  as  antimicrobials  and  antibiotics,  chemical  threat  antidotes,  treatments  for  radiation  injury, 
antitoxins, iodine tablets for nuclear accidents. 
Such  as  diagnostic  tests  and  testing  materials,  laboratory  equipment,  personal  protective  equipment 
(PPE) such as gloves, respirators/masks, gowns, disinfection products and equipment. 
Such  as  tents,  camp  beds,  clothing  and  food;  search  and  rescue  equipment  for  earthquake  regions; 
sandbags,  life  jackets  and  inflatable  boats  for  flood  regions;  radiation  measuring  devices  for  nuclear 
accidents. 
Such  as  development,  production  and  procurement  of  necessary  products;  research  and  innovation 
activities;  joint  procurement  activities;  strategic  stockpiling  of  products;  pharmaceutical  licences; 
application  of  therapeutics;  hosting  of  patients;  exchange  of  medical  professionals  or  other  experts; 
provision of quarantine facilities; clinical trials; scientific validation of medical products; disinfection of 
premises. 
Such as a  hospital,  a  national health or disaster response authority or a private company in charge of 
disaster response. 
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).  
Commission Decision (EU) 2020/1573 of 28 October 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 359, 29.10.2020, p. 8).  
Council  Directive  (EU)  No 2020/2020  of  7 December  2020  amending  Directive  2006/112/EC  as 
regards  temporary  measures  in  relation  to  value  added  tax  applicable  to  COVID-19  vaccines  and  in 
vitro diagnostic medical devices in response to the COVID-19 pandemic (OJ L 419, 11.12.2020, p. 1). 
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 (COM(2020) 688  final). 
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. 

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Member States to apply a reduced rate of VAT to the supply of COVID-19 in vitro diagnostic 
medical devices and services closely linked thereto. In addition, Member States are allowed to 
grant  an  exemption  with  deductibility  of  VAT  paid  at  the  preceding  stage  in  respect  of  the 
supply  of  these  devices  and  closely  linked  services  as  well  as  the  supply  of  COVID-19 
vaccines and services closely linked to those vaccines. 

These measures  provided fast,  efficient  and targeted solutions  for urgent needs occurring in 
the course of the COVID-19 pandemic. They are however very limited in scope of application 
and temporary in nature and not all Member States have chosen to apply the option of zero 
rates where that has been made available. 

The VAT Directive provides, subject to certain conditions and limits, for an exemption14 with 
deductibility of VAT at the preceding stage concerning the importation of goods by and the 
supply  of  goods  and  services  to  European  bodies  (including  the  Commission)  to  which  the 
Protocol  on  the  privileges  and  immunities  of the European  Union  (PPI15)  applies.  Based  on 
the respective interpretation  of the PPI, that exemption  is strictly limited to  purchases made 
for the official use of that EU body. It would not apply to the purchase of goods and services 
which are, for instance, intended for being made available for free to Member States or a third 
party  such  as  a  national  health  authority  or  hospital  as  this  is  not  regarded  as  official  use. 
Precisely  such  cases  can  however  become  particularly  important  in  response  to  crises  and 
hence the currently applicable VAT exemptions are insufficient in this respect. 

The 2018 Commission proposal16 to amend the VAT Directive as regards VAT rates, which is 
pending before the Council, could neither provide a satisfactory solution in lifting VAT from 
all  transactions  at  which  this  initiative  aims.  If  adopted  unanimously  by  Council,  it  would 
allow Member States to apply a reduced rate or even a zero rate17 to certain supplies, if such 
supplies benefit only the final consumer and pursue an objective of general interest. It would 
in any event remain the discretionary decision of Member States to apply any such favourable 
VAT treatment. 

In  order  to  help  Member  States  to  cope  better  with  the  challenges  of  the  digital  age  and  to 
reduce  administrative  burden  associated  with  the  use  of  the  paper  version  of  the  exemption 
certificate provided for in Annex II of Council Implementing Regulation (EU) No 282/201118 
particularly in situations of crises such as pandemics, an electronic form should be introduced. 
The purpose of that form is to confirm that the transaction qualifies for the exemption under 
the first subparagraph of Article 151(1) of the VAT Directive. As already done under Article 
199b(4) of the VAT Directive, the Commission should be empowered to  adopt by means of 
implementing acts the technical details of that form, including a common electronic message 
by which the information is to be transmitted, in consultation of the Standing Committee on 
Administrative  Cooperation  established  by  Article 58  of  Council  Regulation  (EU) 

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Articles 143(1)(fa) and 151(1)(aa). 
Protocol (No 7) on the Privileges and Immunities of the European Union (OJ C 326, 26.10.2012, 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). 
Exemption from VAT with deductibility of the VAT paid at the preceding stage of the supply chain.  
Council  Implementing  Regulation  (EU)  No 282/2011  of  15 March  2011  laying  down  implementing 
measures  for  Directive  2006/112/EC  on  the  common  system  of  value  added  tax  (recast)  (OJ L 77, 
23.3.2011, p. 1). 

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No 904/201019,  applying  the  examination  procedure  referred  to  in  Article 5  of  Regulation 
(EU) No 182/201120. 

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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 has been extended until the end of 
April 2021. It also complements Council Directive (EU) No 2020/2020 of 7 December 2020 
amending  Directive  2006/112/EC  as  regards  temporary  measures  in  relation  to  value  added 
tax applicable to COVID-19 vaccines and in vitro diagnostic medical devices in response to 
the COVID-19 pandemic. 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 initiatives taken under EU policies such as the European 
Health Union and the Pharmaceutical Strategy for Europe. It is particularly consistent with the 
initiatives described below. 

On  14 April  2020,  the  Council  activated  the  Emergency  Support  Instrument  (ESI21),  which 
helps  Member  States  respond  to  the  COVID-19  pandemic  by  addressing  urgent  needs  in  a 
strategic and coordinated manner at EU level. 

On  2 June  2020,  the  Commission  proposed22  targeted  changes  to  the  EU  Civil  Protection 
Mechanism23, allowing the Union and the Member States to be better prepared for and react 
quickly  and  effectively  to  future  crises,  in  particular  those  with  a  high-impact  given  the 
potential  disruption  to  our  economies  and  societies,  as  seen  so  clearly  in  the  COVID-19 
emergency.  The  overall  objective  of  the  EU  Civil  Protection  Mechanism  is  to  strengthen 
cooperation between the EU Member States and six participating States24 in the field of civil 
protection, with a view to improve prevention, preparedness and response to disasters. When 
the scale of an emergency overwhelms the response capabilities of a country, it can request 
assistance via the Mechanism. Through the Mechanism, the Commission plays a key role in 
coordinating the response to disasters in Europe and beyond and contributes to at least 75% of 
the transport and/or operational costs of deployments. The Emergency Response Coordination 
Centre (ERCC)25 of the Commission is the heart of the EU Civil Protection Mechanism and 
coordinates  the  delivery  of  assistance  to  disaster  stricken  countries,  such  as  relief  items, 
expertise, civil protection teams and specialised equipment. 

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Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating 
fraud in the field of value added tax (OJ L 268, 12.10.2010, p. 1). 
Regulation  (EU)  No 182/2011  of  the  European  Parliament  and  of  the  Council  of  16 February  2011 
laying down the rules and general principles concerning mechanisms for control by Member States of 
the Commission’s exercise of implementing powers, (OJ L 55, 28.2.2011, p. 13). 
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). 
Proposal  for  a  Decision  of  the  European  Parliament  and  of  the  Council  amending  Decision 
No 1313/2013/EU on a Union Civil Protection Mechanism (COM(2020) 220 final). 
Decision No 1313/2013/EU on a Union Civil Protection Mechanism (OJ L 347, 20.12.2013, p. 924). 
Iceland, Norway, Serbia, North Macedonia, Montenegro, and Turkey. 
https://ec.europa.eu/echo/what/civil-protection/emergency-response-coordination-centre-ercc_en  

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In  the  2020  State  of  the  Union  address  of  16 September  2020,  the  President  of  the 
Commission  stressed  the  need  to  draw  lessons  from  the  current  crisis  and  build  a  European 
Health Union. In parallel, she outlined the corresponding key initiatives for 2021 in a Letter of 
Intent26  to  the  President  of  the  European  Parliament  and  the  Council  Presidency.  Those 
initiatives also contain legislative proposals aimed at establishing a new European Biomedical 
Research  and  Development  Agency,  extending  the  mandates  of  the  European  Medicines 
Agency (EMA) and the European Centre for Disease Prevention and Control (ECDC) as well 
as establishing a European health data space. 

In its 2021 Work Programme27, the Commission underlined the need to strengthen our crisis 
preparedness and management of cross-border health threats and confirmed that it is time to 
build a stronger European Health Union. The Work Programme contains legislative proposals 
to reinforce the EU’s framework for detecting and responding to serious cross-border health 
threats,  and  to  strengthen  the  roles  of  existing  agencies.  Further  initiatives  will  cover  a 
proposal  to  establish  an  agency  for  biomedical  advanced  research  and  development,  a  new 
pharmaceutical  strategy  ensuring  citizens  can  rely  on  safe,  affordable  and  high  quality 
medicines  and  a  European  health  data  space  to  harness  data  for  better  healthcare,  better 
research, and better policy making to the benefit of patients. 

In March 2021, the new Programme for the Union’s action in the field of health (‘EU4Health 
Programme’)28 was  adopted, which aims to make health systems more resilient to deal with 
cross-border  health  threats  like  COVID-19  and  improve  crisis  management  capacity. 
Moreover, it will make the European Health Union a reality by investing in cancer care, better 
pandemic preparedness, availability of medicines and innovation and boost digital health and 
disease prevention. 

With  its  Communication  of  11 November  202029,  the  Commission  set  out  the  first  building 
blocks  for  a  European  Health  Union.  The  Communication  was  accompanied  by  three 
legislative proposals: a Regulation on serious cross-border threats to health replacing Decision 
1082/2013/EU30, a strengthening of the mandates of the ECDC31 and of the EMA32. 

The new European Health Union initiative advocates the strengthening of existing structures 
and mechanisms for better EU level protection, prevention, preparedness and response against 
human  health  hazards.  It  recommends  a  reinforced  framework  for  cross-border  cooperation 

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https://ec.europa.eu/info/sites/info/files/state_of_the_union_2020_letter_of_intent_en.pdf   
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the  Committee of the Regions of 19 October 2020 – A union of 
vitality in a world of fragility (COM(2020) 690 final) 
Regulation  (EU)  2021/522  of  the  European  Parliament  and  of  the  Council  of  24  March  2021 
establishing a Programme for the Union’s action in the field of health (‘EU4Health Programme’) for the 
period 2021-2027, and repealing Regulation (EU) No 282/2014 (OJ L 107, 26.3.2021, p. 1). 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  Building  a  European  Health 
Union: Reinforcing the EU’s resilience for cross-border health threats (COM(2020) 724 final). 
Decision  No 1082/2013/EU  of  the  European  Parliament  and  of  the  Council  of  22 October  2013  on 
serious  cross-border  threats  to  health  and  repealing  Decision  No 2119/98/EC  (OJ L 293,  5.11.2013, 
p. 1). 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  amending  Regulation  (EC) 
No 851/2004 
control 
(COM(2020) 726 final). 
Proposal for a Regulation of  the European Parliament and  of the  Council on a reinforced role for the 
European  Medicines  Agency  in  crisis  preparedness  and  management  for  medicinal  products  and 
medical devices (COM(2020) 725 final). 

a  European  Centre 

establishing 

prevention 

disease 

and 

for 

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against all health threats in order to protect lives better and to safeguard the internal market as 
well as to maintain the highest standards in the protection of human rights and civil liberties. 
It  also  strengthens  the  EU  role  in  international  coordination  and  cooperation  to  prevent  and 
control cross-border health threats and improve global health security.  

In  the  context  of  the  new  European  Health  Union,  the  Commission  also  announced  a 
legislative proposal to be presented before the end of 2021 setting up the Health Emergency 
Response Authority (HERA). 

With  its  Communication  of  25 November  202033,  the  Commission  put  forward  a  new 
Pharmaceutical  Strategy  for  Europe,  presenting  concrete  actions  to  ensure  accessibility, 
availability and  affordability of medicines. These will support diversified and secure supply 
chains,  ensuring  the  EU's  open  strategic  autonomy  in  the  world,  and  will  promote 
environmentally  sustainable  pharmaceuticals.  The  strategy  also  aims  at  enhancing  crisis 
preparedness and response mechanisms. 

It is important to note that existing and future EU agencies as well as other EU bodies play an 
increasingly  important  role  in  pursuing  the  objectives  of  the  aforementioned  or  other  future 
initiatives.  Hence,  the  present  legislative  proposal  should  also  cover  supplies  made  to  or 
imports made by these agencies or bodies.  

The  EMA  was  founded  in  199534  and  its  mission  is  to  foster  scientific  excellence  in  the 
evaluation  and  supervision  of  medicines,  for  the  benefit  of  public  and  animal  health.  Its 
mandate  will  be  reinforced  in  the  context  of  the  new  European  Health  Union  as  to  include 
monitoring  and  mitigating  potential  shortages  of  critical  medicines  and  medical  devices, 
providing scientific advice on medicines with potential to treat, prevent or diagnose diseases 
causing crises, coordinating studies to monitor the effectiveness and safety of vaccines as well 
as coordinating clinical trials. 

Established in 200535, the ECDC’s mission is to identify, assess and communicate current and 
emerging threats to human health posed by infectious diseases. Its future mandate will cover 
epidemiological  (real-time)  surveillance,  preparedness  and  response  planning,  reporting  and 
auditing,  provision  of  non-binding  recommendations  and  options  for  risk  management, 
capacity  to  mobilise  and  deploy  EU  Health  Task  Force  to  assist  local  response  in  Member 
States  and building a network of EU reference laboratories  and a network for substances of 
human origin. 

The future HERA’s mission will be to enable the EU and its Member States to deploy rapidly 
the  most  advanced  medical  and  other  measures  in  the  event  of  a  health  emergency,  by 
covering the whole value chain from conception to distribution and use36. 

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Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  Pharmaceutical  Strategy  for 
Europe (COM(2020) 761 final). 
Council  Regulation  (EEC)  No 2309/93  of  22 July  1993  laying  down  Community  procedures  for  the 
authorization  and  supervision  of  medicinal  products  for  human  and  veterinary  use  and  establishing  a 
European Agency for the Evaluation of Medicinal Products (OJ L 214, 24.8.1993, p. 1). 
Regulation  (EC)  No 851/2004  of  the  European  Parliament  and  of  the  Council  of  21 April  2004 
establishing a European centre for disease prevention and control (OJ L 142, 30.4.2004, p. 1) 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  –  Building  a  European  Health 
Union: Reinforcing the EU’s resilience for cross-border health threats (COM(2020) 724 final). 

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Several joint procurements37 have been carried out or are planned during 2020/2021 covering 
goods necessary to cope with the COVID-19 pandemic such as personal protective equipment 
(PPE),  ventilators,  laboratory  equipment,  vaccination  material,  rapid-antigen  tests  and 
therapeutics  (e.g.  Remdesivir).  Under  the  Emergency  Support  Instrument,  the  Commission 
has directly procured masks, therapeutics and tests for donation to Member States. 

2. 

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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. 

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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 general exemption from VAT to the importation of goods by 
and the supply of goods and services to the Commission or an EU agency or body intended to 
support and facilitate measures taken at EU level in the public interest. A legislative initiative 
at EU level to amend the Directive is the most efficient way to ensure the functioning of such 
measures  by  fully  eliminating  VAT  as  a  cost  factor  as  well  as  removing  additional  burden 
through related compliance costs. 

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Proportionality 

The proposal is consistent with the principle of proportionality because it does not go beyond 
what  is  necessary  and  is  proportionate  for  achieving  the  intended  objective.  The  initiative 
exempts from VAT the importation of goods and the supply of goods and services which the 
Commission or an EU agency or body acquires in the fulfilment of a mandate conferred on 
them by Union law, particularly order to prepare measures against crises and disasters. Given 
the  impact  that  crises  or  disasters  such  as  the  COVID-19  pandemic  can  have  on  Member 
States' economies, the proposed measures are proportionate in view of their budgetary impact 
on certain Member States as a result of the VAT exemption. 

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Choice of the instrument 

A Directive is required to amend the current VAT Directive. 

3. 

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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. 

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Article 5 of Decision No 1082/2013/EU of the European Parliament and of the Council of 22 October 
2013  on  serious  cross-border  threats  to  health  and  repealing  Decision  No 2119/98/EC  (OJ L 293, 
5.11.2013, p. 1).  

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• 

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  the  ongoing 
COVID-19 pandemic and its implications for comparable future challenges. 

• 

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 pandemic. 

• 

Fundamental rights 

This  proposal  will to  a large extent facilitate Union measures, notably with  regard to  health 
protection. 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 

The proposal will remove VAT as a cost factor for EU programmes. With the same budget, 
this will allow the EU to purchase more goods and services that are, for instance, intended for 
free distribution to a Member State, a national health authority or a hospital. 

By introducing a new VAT exemption, the proposal could reduce VAT revenue collected by 
Member  States  and  therefore  the  VAT  own  resource.  While  there  will  be  no  negative 
implications  for  the  EU  budget,  as  the  own  resource  based  on  gross  national  income  (GNI) 
compensates for any expenditure not covered by traditional own resources and the VAT own 
resource, the non-collected VAT own resources from certain Member States would have to be 
compensated by all Member States through the GNI own resource. However, given that the 
current  volume  of  goods  and  services  purchased  by  EU  institutions  and  subject  to  VAT  is 
small (in comparison to the overall economy), this effect is likely to be extremely limited. 

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 

Points 1  and  2(a)  of  Article 1  aim  at  amending  the  VAT  Directive  by  introducing  an 
exemption from VAT for the importation of goods (new point (fb) in Article 143(1)) by and 
for  the  supply  of  goods  or  services  (new  point (ab)  in  Article 151(1))  to  the  European 
Commission or an agency or a body established under Union law where the Commission or 
the agency or body acquires these goods or services in the fulfilment of a mandate conferred 
on them by Union law in the public interest. 

Point 2(b)  of  Article 1  aims  to  empower  the  Commission  to  render  exemption  certificate, 
which  serves  to  confirm  that  the  transaction  qualifies  for  the  exemption  under  the  first 
subparagraph of Article 151(1) of the VAT Directive, electronic. That electronic form should 

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be  put  in  place  in  order  to  enable  Member  States  to  cope  better  with  the  challenges  of  the 
digital age and to reduce administrative burden associated with the use of the paper version of 
the form particularly in situations of crises such as pandemics. The electronic form should be 
adopted in consultation of the Standing Committee on Administrative Cooperation established 
by Article 58 of Council Regulation (EU) No 904/201038, applying the examination procedure 
referred to in Article 5 of Regulation (EU) No 182/201139. 

The  proposal  will  thus  support  and  facilitate  measures  taken  at  Union  level  in  the  public 
interest by eliminating VAT amounts that become a cost factor as well as related compliance 
burden.  The  transactions  covered  by  this  proposal  are  not  in  any  respect  limited  to  the 
“activities in the public interest” referred to under Title IX, Chapter 2, of the VAT Directive.  

Although the present initiative aims at facilitating measures taken in various policy fields, it is 
particularly urgent in view of the ongoing COVID-19 pandemic. Certain measures, which fall 
under the scope envisaged by this initiative, are already in progress. In order to safeguard their 
maximum  benefit,  Member  States  should  apply  the  VAT  exemption  introduced  by  the 
proposal to transactions carried out as from 1 January 2021 retroactively. 

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Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating 
fraud in the field of value added tax (OJ L 268, 12.10.2010, p. 1). 
Regulation  (EU)  No 182/2011  of  the  European  Parliament  and  of  the  Council  of  16 February  2011 
laying down the rules and general principles concerning mechanisms for control by Member States of 
the Commission’s exercise of implementing powers, (OJ L 55, 28.2.2011, p. 13). 

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2021/0097 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2006/112/EC as regards exemptions on importations and on certain 
supplies, in respect of Union measures in the public interest 

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 Parliament1,  
Having regard to the opinion of the European Economic and Social Committee2,  

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

In  accordance  with  Council  Directive  2006/112/EC3,  Member  States  are  to  exempt 
from value added tax (VAT) the importation of goods by and the supply of goods and 
services  to  the  European  Union,  the  European  Atomic  Energy  Community,  the 
European Central Bank or the European Investment Bank, or by the bodies set up by 
the European Union to which the Protocol (No 7) on the privileges and immunities of 
the European Union, annexed to the Treaty on the Functioning of the European Union 
(“the Protocol”), applies, within the limits and under the conditions of the Protocol and 
the agreements for its  implementation  or the headquarters agreements,  in so  far as it 
does not lead to distortion of competition. That exemption is, however, strictly limited 
to purchases made for official use and it does not extend to situations where goods and 
services are purchased by Union bodies in the public interest, particularly when they 
are  to  be  made  available  for  free  to  Member  States  or  third  parties  such  as  national 
authories or institutions. 

Experience  gained  during  the  course  of  the  COVID-19  pandemic  shows  an  urgent 
need for the adoption of measures in order to create readiness to act when dealing with 
comparable situations in the future. To enable such action, it is necessary to introduce 
a  broad-based  VAT  exemption  for  the  acquisition  of  goods  and  services  by  the 
Commission or by an agency or body established under Union law in the fulfilment of 
a  mandate  conferred  on  it  by  Union  law  in  the  public  interest.  Such  exemption  is  in 
particular  a  prerequisite  for  the  ability  to  deliver  solutions  required  to  facilitate 
coordinated  measures  of  crisis  management  at  Union  level.  It  would  ensure  that 
measures to be taken under the various Union initiatives are not hampered by amounts 

1 
2 
3 

OJ C , , p. . 
OJ C , , p. . 
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). 

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of  VAT  to  be  collected  or  related  compliance  burden  imposed  on  suppliers  of  the 
goods  or  services  needed.  The  transactions  covered  by  the  exemption  introduced  by 
this proposal shall not in any respect be limited to the “activities in the public interest” 
referred to under Title IX, Chapter 2, of of Directive 2006/112/EC. 

There  is  already  an  exemption  certificate  in  place,  set  out  in  Annex II  to  Council 
Implementing Regulation (EU)  No 282/20114, which serves to  confirm  that  a supply 
of goods or services made to an eligible body or individual qualifies for the exemption 
under  Article  151  of  Directive  2006/112/EC.  The  Commission,  agency  or    body 
established  under  Union  law  acquiring  the  goods  and  services  to  which  the  new 
exemption  from  VAT  applies  should  be  required  to  produce  a  certificate  for  their 
suppliers confirming that the relevant transaction qualifies for exemption. To facilitate 
issuance  and  transmission,  that  certificate  should  be  electronic.  In  order  to  ensure 
implementation  of  Article  151(1)  of  Directive 
uniform  conditions  for 
2006/112/EC,  implementing  powers  should  be  conferred  on  the  Commission  in 
respect  of  the  technical  details  for  the  content  and  the  issuance  of  the  exemption 
certificate as well as the specifications as regards the electronic message by which the 
information  contained in  the certificate is  to  be transmitted.  Those powers should be 
exercised  in  accordance  with  Regulation  (EU)  No  182/2011  of  the  European 
Parliament and of the Council5. 

the 

Directive 2006/112/EC should therefore be amended accordingly. 

In view of the current COVID-19 pandemic, some measures that could fall under these 
exemptions are already underway. In order to make the best use of the Union budget in 
the  public  interest,  the  exemptions  introduced  by  this  Directive  should  apply  from  1 
January 2021, 

(3) 

(4) 

(5) 

HAS ADOPTED THIS DIRECTIVE: 

Directive 2006/112/EC is amended as follows: 

(1) 

in Article 143(1), the following point (fb) is inserted: 

Article 1 

‘(fb)  the  importation  of  goods  by  the  Commission  or  by  an  agency  or  a  body 
established  under  Union  law  where  the  Commission  or  any  such  agency  or 
body acquires these goods or services in the fulfilment of a mandate conferred 
on it by Union law in the public interest;’; 

Article 151(1) is amended as follows:  

in the first subparagraph, the following point (ab) is inserted: 

‘(ab)  the supply of goods or services to the Commission or to an agency or a body 
established  under  Union  law  where  the  Commission  or  any  such  agency  or 
body acquires these goods or services in the fulfilment of a mandate conferred 
on it by Union law in the public interest;’; 

Council  Implementing  Regulation  (EU)  No 282/2011  of  15 March  2011  laying  down  implementing 
measures  for  Directive  2006/112/EC  on  the  common  system  of  value  added  tax  (recast)  (OJ L 77, 
23.3.2011, p. 1). 
Regulation  (EU)  No  182/2011  of  the  European  Parliament  and  of  the  Council  of  16  February  2011 
laying down the rules and general principles concerning mechanisms for control by Member States of 
the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13). 

(2) 

(a) 

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(b) 

the following subparagraph is added: 

‘An  exemption  certificate  shall  be  established,  which  serves  to  confirm  that  the 
transaction qualifies for the exemption under the first subparagraph of this paragraph. 
The Commission shall specify, by means of implementing acts, the technical details 
regarding  the  content  and  the  issuance  of  the  exemption  certificate  as  well  as  the 
specifications as regards the electronic message by which the information contained 
in  the  certificate  is  to  be  transmitted.  Those  implementing  acts  shall  be  adopted  in 
accordance  with  the  examination  procedure  referred  to  in  Article 5  of  Regulation 
(EU)  No 182/2011  and  for  this  purpose  the  committee  shall  be  the  committee 
established by Article 58 of Council Regulation (EU) No 904/2010.’. 

Article 2 

Transposition 

1. 

Member  States  shall  adopt  and  publish,  by  30 April  2021  at  the  latest,  the  laws, 
regulations  and  administrative  provisions  necessary  to  comply  with  this  Directive. 
They shall forthwith communicate to the Commission the text of those provisions. 

They shall apply those measures from 1 January 2021. 

When  Member  States  adopt  those  provisions,  they  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. 

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 

It shall apply from 1 January 2021. 

This Directive is addressed to the Member States. 

Done at Brussels, 

Article 4 

For the Council 
The President

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

NAME OF THE PROPOSAL: 

Proposal for a COUNCIL DIRECTIVE amending Council Directive 2006/112/EC to 
lift the cost of VAT on Union measures in the public interest. 

2. 

BUDGET LINES  

2021 

Chapter 13, Article 130 

Amount budgeted for the year 2021: 17 967 491 250 € 

3. 

FINANCIAL IMPACT  

The Proposal has a financial impact on both expenditure and revenue – the effect is 
as follows: 

Budget line 

Revenue  

Period: 01/01/2021 to 31/12/2021 

Impact on 
own 
resources 

(€ million to one decimal place) 

Savings in the 
Commission's 
expenditure on VAT 
amounts (potentially on 
very different budget 
lines)  

Article 130 Chapter 13 

Total  

- 110.00 

1.65 

- 108.35 

The  new  exemption  from  VAT  introduced  by  this  proposal  is  limited  to  imports  of  goods 
made by and supplies of goods and services made to the Commission or an agency or other 
body  established  under  Union  law  and  is  not  open  to  imports  or  purchases  made  by 
commercial operators. 

The  purpose  of  the  proposal  is  to  remove  the  amounts  of  VAT  from  the  budgetary 
expenditures  of  the  Commission  or  an  agency  or  other  body  established  under  Union  law. 
This  will  mainly  concern  procurements  of  goods  or  services  intended  to  be  given  free  of 
charge (donated) to Member States or third parties. For reasons of simplification and due to 
the lack of availability of data on actual VAT amounts paid from EU budgets, the budgetary 

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savings  for  2021  have  been  estimated  in  retrospect  of  the  2020  budget  for  the  Emergency 
Support  Instrument  (ESI)  amounting  to  EUR  3 450  million.  From  this,  the  budget  for  the 
vaccine instrument of EUR 2 900 million was deducted because these transactions have been 
made to Member States directly (not to the Commission).  

On  this  basis,  the  total  estimated  value  of  imports  and  supplies  of  goods  and  services 
concerning  “buy  and  donate”  activities  covered  by  the  proposal  for  the  period  is 
EUR 550 million. The amount of VAT saved on budgetary expenditures is estimated using a 
deemed tax rate of 20% and hence amounts to EUR 110 million. 

The effect on the EU budget of the decrease in the VAT own resource, taking into account the 
uniform rate of call (0.30%), is estimated at EUR 1.65 million. 

Although most of these expenditures under the ESI have actually be VAT exempt to Decision 
(EU) 2020/491  (imports of health material) and Council Directive (EU) No 2020/2020 (zero-
rating  of  tests),  “buy  and  donate”  activities  can  virtually  be  on  any  good  or  service  in  the 
future and the above mentioned legal acts are of a temporary nature. It is therefore reasonable 
to take the total amount of the ESI (minus the part on vaccines) as an assumption. 

4. 

ANTI-FRAUD MEASURES 

The  Decision  contains  provisions  by  which  Member  State  authorities  are  bound  to 
communicate to the Commission the text of the main provisions of national law, which they 
adopt in the field covered by the proposal. 

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