The European Commission sent a letter of formal notice to the United Kingdom for extending the scope of a value added tax (VAT) derogation concerning “zero-rating transactions” carried out on 11 commodity markets in the UK.
According to the EC release, the UK notified the EC of the derogation in 1977. Since that time, the UK considerably extended the scope of the measure, and it is no longer limited to trading in the commodities originally covered by the derogation. The EC found that this action infringes EU law because this type of “standstill” derogation cannot be extended in scope. It is also generating major distortions of competition to the detriment of other financial markets within the EU.
If the UK does not act within the next two months, the EC may send a “reasoned opinion” to the UK authorities.
Read a March 2018 report prepared by the KPMG member firm in the UK
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