Insurance Europe has today published its response to the European Commission’s roadmap for the review of VAT rules for financial and insurance services.
While welcoming the Commission’s plans to tackle the lack of VAT neutrality, legal uncertainty and regulatory complexity, Insurance Europe emphasized the need to go further and ensure that VAT rules are adapted to reflect the realities of the modern business environment. Indeed, the current rules are outdated and cannot be adequately applied to the provision of modern financial services.
Another major issue is the lack of harmonisation in how VAT rules are implemented across member states. This fragmentation in the internal market is a significant barrier to the Capital Markets Union. The resulting uneven playing field also has an adverse effect on competition and leads to the inappropriate taxation of financial services providers, lost VAT income for EU member states, and a considerable cost for businesses, which is largely passed on to customers.