Brussels, 26/05/2016 (Agence Europe) - France and Finland have opposed the option for the Council of the EU to “invite the European Commission to present legislative initiatives allowing interested member states to apply the reverse-charge mechanism to domestic transactions on a broad basis as soon as possible”. This wording, which was tabled by the Czech Republic to the Ecofin Council on Wednesday 25 May, during a debate behind closed doors, is therefore not included in the final conclusions of the Council.
The several months, the Czech Republic has been calling for authorisation to carry out a pilot project for a reverse-charge mechanism, providing for VAT to be paid by the final consumer. At the Ecofin meeting of 25 May, the country once again reiterated the scale of VAT fraud which, it claims, is greater than the Czech deficit. In June, the Commission is to present a report to Ecofin, exploring several options. If it was to propose a pilot project for a reverse-charge mechanism, it would first of all have to carry out an impact assessment.
Flexibility on setting reduced VAT rates. During the debate in camera, the United Kingdom welcomed the flexibility the Commission is proposing to give the member states to set reduced VAT rates. In its final conclusions, the Council calls upon the Commission to present a legislative proposal providing for an option for the member states to apply reduced or zero VAT rates to feminine sanitary products at its earliest convenience. In a letter to the British Chancellor of the Exchequer on Tuesday, of which EUROPE has had sight, the European Commissioner for Taxation, Pierre Moscovici, states his intention of presenting a proposal to this effect, as well as for reduced rates on electronic publications “in the not too distant future and certainly by the end of 2016”.
In their conclusions, the ministers call upon the Commission to present an initiative on reduced rates for electronic publications by the end of 2016 and, by request of Austria, to include in it an impact assessment. On more general note, Austria also referred to a study by Copenhagen Economics on reduced VAT rates and said that their effectiveness had not been proven in terms of support for the sectors of the economy covered by these reduced rates. The Austrian Minister added that this could create competition distortions on the single market. (Original version in French by Élodie Lamer)