COVID Pandemic and Tax Exemptions in the EU Countries

It’s been a while since governments are trying to mitigate the economic consequences of the ongoing COVID pandemic. European Council announced that it had adopted an amendment to the VAT Directive to introduce a temporary VAT exemption on importations and certain supplies in response to the COVID-19 pandemic.

The “buy and donate” directive, which applies retroactively from January 1, 2021, will make it easier for the Commission and EU agencies to buy goods and services to distribute them free of charge to member states in the context of the ongoing public health crisis.

The new exemption will allow for more donations to member states and their institutions, as it will relieve the EU bodies of the budgetary and administrative burdens that hindered the process.

Meanwhile, in the UK, HMRC (Her Majesty’s Revenue and Customs) is making a return to previous levels of compliance vigilance. The extra revenue HMRC brought in from its compliance activity jumped 29 percent to GBP14.2bn in Q1 2021, it also emerged, an increase from GBP11bn in the same period in 2020.

In Belgium, the authorities are taking a different approach, announcing that companies facing financial difficulties because of COVID may apply for a lengthy tax repayment plan.

Most companies will be eligible for a 24-month repayment plan, the tax agency said, with a 36-month plan granted only in exceptional circumstances. Large companies may be afforded up to 50 months to pay.

And last but not least, in Italy, it was announced that the European Commission has approved a EUR2.5bn Italian scheme to support self-employed individuals and certain healthcare professionals in the context of the coronavirus outbreak, by partially exempting them from social security contributions.

The scheme involves exempting self-employed individuals and certain healthcare professionals from social security contributions for the year 2021, up to a maximum annual amount of EUR3,000 per person, and will be open to self-employed individuals who have suffered a decrease in turnover or professional fees of at least one third in 2020, compared with 2019, and whose 2019 overall income subject to such social contributions did not exceed EUR50,000.