Green MEP calls on government to stick with EU VAT regime post-Brexit as EU launches new VAT package

Molly has called on Brexit secretary David Davis to confirm that the UK will maintain adherence to the European Union VAT regime post-Brexit. Her call comes as the European Commission launches its new VAT package which includes greater flexibility for member states, particularly in respect of reduced and super reduced VAT rates.

Molly handles VAT files for the European Parliament’s Green Group and said:

“In what appears to be another careless oversight, the Brexit Department don’t seem to have noticed the potentially devastating impact of having to pay VAT on intermediate goods up-front on the cash-flow of our businesses. Given the lack of preparedness across all sectors, businesses will face a future with far more certainty if we maintain the EU VAT regime for the foreseeable future.

“There is no requirement to be an EU member to harmonise VAT policy. Neither the Isle of Man or Monaco are members of the EU but are part of the EU VATMoss system. This greatly simplifies administration for businesses trading with the single market.”

The new package announced by the Commission allows greater flexibility which is something the Conservative government sought to negotiate prior to the EU referendum. It will allow, for example, zero rated VAT on sanitary products, if the UK government chooses. The package also extends VAT exemption for SMEs and updates the exemption threshold to €100000 annual turnover. This was something that Molly lobbied the Commission strongly over. She said:

“I am delighted that the new VAT package includes my suggested €100,000 threshold. The changes on VAT show that the EU is constantly evolving and reforming and this is achieved through the patient work by MEPs and business groups, not in response to bullying and bluster. What could be more democratic than that?

Molly has also long championed zero VAT for sanitary products across Europe. She concluded:

“We should remember that it was a British government that failed to request zero rates for tampons under the previous VAT package; a choice that Ireland made. The new package responds to the requests of EU governments for greater flexibility on VAT. This will enable zero rating on sanitary products, if the government chooses this.”