Brussels, 27/01/2011 (Agence Europe) - On Thursday 27 January, the European Commission decided to refer Spain, Finland, France, Greece, Italy, Poland, Portugal and the Czech Republic to the Court of Justice, as these countries have been incorrectly applying the “special margin scheme” provided for under the VAT directive to travel agents, which has distorted competition between these agencies.
This “special margin scheme” aims to simplify the application of VAT for elements of package holidays sold in various countries, which means that they are subject to different VAT rules. It applies only to travel agencies which sell package holidays to travellers, and under no circumstances does it apply to agencies which resell to intermediary companies. However, the eight countries listed above were applying this scheme incorrectly, by allowing its application to the sales of holidays between agencies. This meant that competition was distorted, with some agencies liable for larger tax burdens than others.
The Commission first noted this problem in 2006 relating to 13 member states, and sent a reasoned opinion to the eight aforementioned countries in February 2008. The others (the United Kingdom, the Netherlands, Hungary, Cyprus and Latvia) have since made changes to their legislation.
Cyprus/automotive. The Commission has also asked Cyprus to modify the provisions of its legislation which grants Cypriot citizens, nationals and descendants returning to settle permanently on the island exemptions on import and excise duty for imported new passenger cars. The same exemption is not granted to other citizens of the Union unless they do not carry out any professional activities in the country, which creates discrimination towards them. Cyprus has two months to modify these provisions, or the Commission may refer the matter to the Court. (F.G./transl.fl)