The European Union’s common system of value added tax (VAT)

 

SUMMARY OF:

Directive 2006/112/EC – the European Union’s common system of value added tax

WHAT IS THE AIM OF THE DIRECTIVE?

It recasts and repeals the sixth value added tax (VAT) directive in order to clarify the current VAT legislation in the European Union (EU).

KEY POINTS

VAT is applied to all transactions carried out in the EU for payment by a taxable person (i.e. an individual or a business that supplies goods and services in the course of their work). Imports by any person are also subject to VAT.

Taxable transactions include supplies of goods or services within the EU, acquisitions of goods between EU Member States (goods supplied in and dispatched or transported by a business from one Member State to a business in another) and imports of goods into the EU from non-EU countries.

A number of amendments have been made to Directive 2006/112/EC, including some amendments due to the COVID-19 pandemic.

Reform of the VAT system

As part of the reform proposed in the Commission’s 2016 action plan on VAT, amending Directive (EU) 2022/542 amends Directive 2006/112/EC by:

FROM WHEN DOES THE DIRECTIVE APPLY?

Directive 2006/112/EC has applied since 1 January 2007 and had to become law in the Member States by 1 January 2008.

BACKGROUND

For further information, see:

MAIN DOCUMENT

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, pp. 1–118).

Successive amendments to Directive 2006/112/EC have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED DOCUMENTS

Council Directive (EU) 2020/285 of 18 February 2020 amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises (OJ L 62, 2.3.2020, pp. 13–23).

Council Directive (EU) 2020/284 of 18 February 2020 amending Directive 2006/112/EC as regards introducing certain requirements for payment service providers (OJ L 62, 2.3.2020, pp. 7–12).

Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on an action plan on VAT Towards a single EU VAT area – Time to decide (COM(2016) 148 final, 7.4.2016).

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, pp. 1–18).

See consolidated version.

Council Directive 2009/132/EC of 19 October 2009 determining the scope of Article 143(b) and (c) of Directive 2006/112/EC as regards exemption from value added tax on the final importation of certain goods (OJ L 292, 10.11.2009, pp. 5–30).

See consolidated version.

Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (OJ L 44, 20.2.2008, pp. 23–28).

See consolidated version.

Council Directive 2007/74/EC of 20 December 2007 on the exemption from value added tax and excise duty of goods imported by persons travelling from third countries (OJ L 346, 29.12.2007, pp. 6–12).

Council Directive 2006/79/EC of 5 October 2006 on the exemption from taxes of imports of small consignments of goods of a non-commercial character from third countries (codified version) (OJ L 286, 17.10.2006, pp. 15–18).

last update 26.04.2022