The European Commission has recently announced a drastic shake-up of VAT rules, which could mean substantial and expensive changes to charity reliefs.

An action plan geared at creating a single EU VAT area, entitled ‘Towards’ was adopted by the Commission earlier this month.

The new strategy has wide-ranging implications for VAT and charity tax rules, particularly for charity reliefs.

The old EU rules previously issued each nation with a list of specific goods and services upon which individual Governments could impose a zero rate of VAT.

But the new proposals suggest either scrapping the list-system altogether, or giving Governments more freedom to add and remove products and services as they see fit.

Experts at the Charity Tax Group (CTG) have argued that the proposals fundamentally mean good news for charities, as many will be free to lobby for more of their services to be given VAT rate of zero.

But there are also concerns that Governments could potentially remove a number of longstanding reliefs which charities currently enjoy.