Taxation and Customs Union

TAXATION

Commission requests the UNITED KINGDOM to align its rules regarding the VAT treatment of certain UK commodity markets with EU rules

On 8 March the Commission has sent a letter of formal notice to the United Kingdom for extending the scope of a VAT derogation that consists in zero-rating transactions carried out on eleven named commodity markets in the United Kingdom.

Since the UK notified that derogation to the Commission in 1977, the UK has considerably extended the scope of the measure and it is no longer limited to trading in the commodities originally covered by the derogation. This infringes EU law (the VAT Directive, Council Directive 2006/112/EC) because this type of "standstill" derogation cannot be extended in scope. It is also generating major distortions of competition to the detriment of other financial markets within the EU.

If the United Kingdom does not act within the next two months, the Commission may send a reasoned opinion to the UK authorities.

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