On 22 June 2018, the Council adopted a directive making the 15% minimum standard rate a permanent feature of a new VAT system.
The minimum standard rate prevents excessive divergence in VAT rates in the member states. This eliminates the risk of distortions of competition through lower VAT rates that would have an impact on cross-border shopping and trade.
A 15% minimum standard rate has been maintained on a provisional basis since VAT rules for the EU single market were first applied in 1993. It was last extended in May 2016 for two years, expiring on 31 December 2017.
Proposals aimed at replacing the current ‘transitional’ VAT arrangements with a definitive VAT system and reforming VAT rates are meanwhile under discussion. The Commission issued proposals in January and May 2018.
The directive was adopted at a meeting of the Economic and Financial Council, without discussion.