In preparation for a potentially radical shake-up of VAT legislation, the European Commission is now consulting on significant changes to the VAT system that will impact nonprofit organisations across the continent. The consultation reviews the existing VAT legislation on public bodies and tax exemptions in the public interest.
Charities in the European Union currently face an estimated irrecoverable VAT tax bill of around €6 billion. This new consultation, launched on 14th October 2013, considers a range of options for harmonising the VAT system across Member States.
“A number of possible VAT structures are under consideration, including a full taxation model that would generate €186 billion for the state. This model would worsen the situation for charities, incurring a huge cost. Charities must act now and ensure their views are represented in the consultation”, says Günther Lustchinger, EFA President and Chief Executive of Fundraising Verband Austria.
EFA encourages all nonprofits impacted by irrecoverable VAT payments to contribute to the consultation before its closing date of 14th February 2014. Funding has also been allocated to ECCVAT for their campaign to create a more positive and representative landscape for charity VAT.
EFA will shortly release a briefing paper summarising our position and recommendations on VAT. The briefing paper will be posted here on EFA's website.
To take part in the VAT consultation, click here.