According to several sources, France has asked for the legal services of the Council of the EU to be consulted over the question of the compatibility with the treaties of the proposal of the European Commission to define a raft of criteria to allow certain countries to derogate from the VAT directive in order to apply a reverse-charge mechanism, providing for VAT to be paid by the final consumer (EUROPE 11694).
A number of sources also expressed concerns that the Czech Republic - which has been asking for permission for several years to be able to carry out a pilot project on a reverse charge mechanism - may decide to take hostage a text that is close to France's heart: reduced VAT on electronic publications. Both of these proposals were on the agenda of the Council working group on taxation matters on Thursday 9 March.
As regards the reverse charge mechanism, the states also seem to be moving towards the possibility that the Council, rather than the Commission, would be able to authorise such a derogation. According to our information, the Czech Republic would like the decision to be made by qualified majority. The Council would also have powers to suspend the derogation if the implementation of reverse charge in these terms proved harmful to the single market. These powers would be granted to the Council, but upon recommendation of the Commission.
On the reduced rate of VAT, the text has been amended slightly, largely to provide a number of clarifications requested by various delegations. The text would, however, seem to be generally acceptable.
According to several sources, the two dossiers are expected to be included on the agenda of the March Ecofin Council for a guideline debate. (Original version in French by Élodie Lamer)