EU l Proposal to Zero-Rate Supplies for EU Armed Forces Common Defence Efforts

The EC published a proposal to zero-rate supplies of goods and services provided to armed forces deployed outside their Member State as part of an EU activity.

The European Commission has recently published a proposal to zero-rate supplies of goods and services provided to armed forces deployed outside their Member State as part of an EU activity  under the common security and defence policy (CSDP).

Current EU legislation already allows armed NATO forces to benefit from this VAT exemption for supplies that include accommodation, food, fuel, transportation and training materials. The aim of this legislation is to harmonise the VAT treatment of both defence efforts.

The new rules would release armed forces deployed outside their own Member State from having to pay VAT and excise duties to other Member States when they are involved in common defence activities either under NATO or within the common EU framework.

Once enacted this directive is expected to come into effect as of 1st July 2022.