EU approves VAT exemption for covid vaccines and testing kits

New measures have been adopted which will allow EU Member States to put in place a temporary VAT exemption for vaccines and testing kits being sold to hospitals, doctors and individuals, as well as closely related services (see Commission Proposal of 28 October 2020).

Currently, Member States are permitted to apply reduced VAT rates on sales of vaccines but cannot apply a zero rate, while testing kits cannot benefit from reduced rates. Pursuant to amendments to the VAT Directive, Member States may opt to apply either reduced or zero rates to both vaccines and testing kits.