Brussels, 25/11/2009 (Agence Europe) - The Swedish Presidency of the Council of the EU is taking action over the question of value-added tax (VAT) exemption for postal services. Ahead of the ECOFIN Council of Wednesday 2 December, it is suggesting a different approach to the Member States from the one suggested a month ago. It suggests that the Council of Ministers should decide on a political guideline whereby VAT exemption should apply to postal services covered by the universal service requirement, as stipulated in the European Court of Justice ruling on the case TNT Post UK Ltd (Case C-357/07) earlier this year (see EUROPE 9819). Member States that so desire would still have the option of levying VAT on the services concerned, however. If the politicians back this idea, it would then be for Member States' experts to draft legislation ahead of the adoption of legislation before the end of next year. This timing would coincide with the entry into force of the third postal directive that will open up to competition from 1 January 2011 onwards the processing of letters weighing up to 50 g (1 January 2013 for eleven Member States).
The Swedish Presidency has made a U-turn on the approach it was recommending at the ECOFIN Council in October this year, explained a postal industry expert. A month ago, Sweden suggested that all postal services should be subject to VAT and the Member States should have the option of declaring a VAT exemption for their postal services. The subject could not be discussed because the support required to agree on the matter could be found.
Three Member States (Finland, Slovenia and Sweden) are reported to want to continue to levy VAT on postal services, if the current compromise deal gets the go-ahead from the Member States. The above-mentioned expert suggests that this would not get to the heart of the problem because the Member States could continue to do as they like. There would also be the danger that the Commission or a postal services operator would challenge a Member State's legislation on the grounds that taxing postal services runs counter to Court of Justice case law. (M.B. trans fl)