EU Finds Countries’ Usage of Value-Added Tax Exemptions Lopsided

Three EU countries apply a large majority of the bloc’s in-force value-added tax exemptions and reduced rates, raising “questions about transparency and fairness in the bloc’s tax system,” according to a new report.

Luxembourg, Ireland, and Italy account for 75% of current VAT derogations—which include any instances of reduced VAT rates or exemptions—according to a report issued by the European Commission.

The remaining 25% is made up of exemptions and reduced rates offered from Malta, Cyprus, Greece, France, Portugal, Spain, and Austria.

The commission said in a press release Tuesday the report “underscores concern about fragmentation in VAT ...