The European Commission has adopted a proposal for a Directive aimed at modernising and simplifying the complex VAT rules for financial and insurance services.

According to the Commission press release,

• – Financial and insurance services are generally exempt from VAT but the exemption dates from 1977 and the legislation has not kept abreast of developments since then.
• – The exemption is not applied uniformly by the Member States and thus frequently the European Court of Justice has been asked to fill the legislative gap and clarify the correct interpretation.
• – The proposal will create more certainty and security for Member States and for financial and insurance institutions by setting clear modern definitions of exempt services.
• – The proposal for a Directive is accompanied by a proposal for a Regulation which expands the definitions of exempt services and will apply directly in all Member States.

Further information is available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/1782&format=HTML&aged=0&language=en&guiLanguage=en.