EU recommends VAT payment holidays for economic boost Covid-19 crisis

The EU’s European Commission (EC) has recommended that member states looking to provide businesses with immediate support during the coronavirus pandemic should consider Value Added Tax payment holidays. Avalara’s live global coronavirus Covid-19 VAT measures tracker.

VAT, and other tax payment deferments offer immediate cashflow relief for companies facing a drop-off in revenues. However, VAT cuts should be passed onto the consumer, and so not directly helping businesses. In addition, with the public lock-down, encouraging more shopping is not an attractive objective.

The EC has already indicated that it will relax state-aid rules for tax relief to specific businesses or industries.