On 17 November 2010, the Ecofin Council held a policy debate on proposals (adopted in November 2007) to introduce a new directive and regulation clarifying the rules on the VAT treatment of insurance and other financial services.

Under the rules laid down in the VAT directive, financial services (including insurance) are exempt from VAT. EU Member states have, however, interpreted the directive differently, leading to distortions of competition. The proposals are deigned to reflect changes in the banking and insurance industry, particularly in respect of outsourced services and include an option to tax in respect of financial services and the pooling of exempt investments.

The Council agreed that further work should be undertaken on modernising the definition of exempt services and asked the permanent representatives’ committee to oversee further work on the proposals.