COVID-19: temporary VAT exemption for procurements by the EU Commission - amendment of the VAT Directive as per 15 July 2021

On 15 July 2021, the "Council Directive (EU) 2021/1159 of 13 July 2021 amending Directive 2006/112/EC as regards temporary exemptions on importations and on certain supplies, in response to the COVID-19 pandemic" entered into force. If the EU Commission centrally procures goods or services to respond to the COVID-19 pandemic and passes them on free of charge, they should not be subject to VAT.


If the EU Commission or EU agencies/bodies import goods into the EU to respond to the COVID-19 pandemic, these imports are exempt from VAT. Supplies of goods or services to the EU Commission and EU agencies/bodies are also exempt. In both cases, the exemption does not apply if the goods or services are directly or subsequently supplied for consideration. The exemption therefore covers, in particular, the supply of goods or services free of charge to Member States, e.g., to hospitals or health authorities. There is already a tax exemption for EU purchases, but this is limited to purchases for official use.

Entry into force/retroactive application/period of validity

Directive (EU) 2021/1159 entered into force on July 15, 2021 when it was published in the Official Journal of the EU. It is intended to apply until the emergency situation is overcome. It will apply retroactively from January 1, 2021 and Member States will have to apply it from that date onwards but will not have to transpose it into national law until December 31, 2021.

Accordingly, entrepreneurs should already be able to directly refer to the Directive for transactions conducted since January 1, 2021 and treat them as VAT exempt. Already submitted preliminary VAT returns can be corrected.

As the transposition into national law has not yet taken place and no application notes have been published by the BMF (Germany’s Federal Ministry of Finance), the details of this new tax exemption are still largely unclear. In particular, the evidence required for fulfilling the conditions has not yet been regulated. It seems conceivable that the EU Commission or EU agencies/entities ordering the goods or services will issue a certificate as proof of tax exemption. This would have to show that the services purchased are intended to be used to combat the COVID-19 pandemic.