The Commission decided, under Article 260 of TFEU, to send a letter of formal notice to the United Kingdom for not properly applying EU VAT rules for the trade in financial instruments on certain terminal markets and for not enforcing the judgment delivered by the Court of Justice of the EU on 14 May 2020 (Commission vs United Kingdom, C-276/19). In its judgment, the Court stated that the UK had failed to fulfil its obligations under EU VAT rules (Article 395(2) of Council Directive 2006/112/EC) by extending the scope of a VAT derogation, originally put in place in 1977, which applies a zero-rate to transactions carried out on certain terminal markets in the UK, without submitting an application to the European Commission with a view to seeking the authorisation of the Council of the European Union. As a result, the derogation is incorrectly applied by the United Kingdom to trading in commodities other than those originally covered. The exception to the normal requirement to keep VAT records has also been extended. The UK now has two months to reply to the letter of formal notice.
Source ec.europa.eu
