CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. ECJ Rules Against UK's VAT Rules For Commodities Trading

ECJ Rules Against UK's VAT Rules For Commodities Trading

by Jason Gorringe, Tax-News.com, London

28 May 2020


The European Court of Justice (ECJ) on May 14, 2020, ruled against UK value-added tax rule changes for commodities trading.

The European Commission decided in January 2019 to refer the UK to the ECJ for extending the scope of a zero-rate VAT scheme for certain commodities traders.

Since 1977, the UK has applied a zero-rate of VAT to transactions carried out on certain commodity markets. The UK has, in the period since, considerably extended the scope of the measure. The Commission considered that it has expanded it to the extent that it is no longer limited to trading in the commodities originally covered.

Article 394 of the EU's VAT Directive provides for a special arrangement derogating from the usual EU system for collecting VAT. However, this case concerns a so-called "standstill derogation," meaning that the measure cannot be extended in scope, the Commission said. The Commission said that the UK has made at least eight amendments to the derogation, without notifying it of the changes.

The ECJ ruled, in Commission v the United Kingdom (Case C-276/19): "[The Court declares] that by introducing new simplification measures that extend the zero-rating and the exception to the normal requirement to keep value added tax records which were provided for in the Value Added Tax (Terminal Markets) Order 1973, as amended by the Value Added Tax (Terminal Markets) (Amendment) Order 1975, without submitting an application to the European Commission with a view to seeking the authorisation of the Council of the European Union, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 395(2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax."

The UK Government said it is reviewing the decision of the Court. It said it will provide further details on the next steps in due course.

HM Treasury stated: "The decision does not require businesses to pay any VAT on historic transactions, and the law applying to derivatives trades today means no VAT is due. That will remain the case while the UK considers next steps in the light of the ruling."

TAGS: tax | business | European Commission | value added tax (VAT) | law | United Kingdom | trade | Europe | Tax

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »