Commission is to present recommendations over next few months on reduced VAT rates

Brussels, 13/01/2003 (Agence Europe) - According to a declaration by the French Minister for the Economy, Francis Mer, on EUROPE 1 on Sunday, the dossier calling for a reduced VAT rate of 5.5% to be applied to the catering sector was to be forwarded by Paris to the European Commission on 13 January. In order to apply this rate, already in force for fast food, France needs the endorsement of its European partners. "We need unanimity from our colleagues. It will not be applicable in 2003, but I believe that, in 2004, we have every chance of succeeding", the minister said. Furthermore, it is "out of the question", he said, to "go backwards" on 5.5% VAT in construction. We recall that Community legislation in force provides for each Member State to practise a minimum VAT rate of 15%, with a reduced rate for certain products and services, which cannot be below 5%. Such products are mainly foodstuffs, medical care, transport, books and entertainment, social housing, hotels and catering and funeral services. At the same time, the Commission has been experimenting since early 2000 with a reduced rate on five sectors with high labour intensity - work in housing, window washing and the cleaning of housing, home care, small repair services and hairdressing. In the context of this experiment, France enjoys, for a three-year period between September 1999 and end 2002, a reduced VAT rate of 5.5% in the building sector for work on rehabilitation of housing, window cleaning and the cleaning of housing, as well as for home care.

In this context, Jonathan Todd, the spokesperson for European Commissioner Frits Bolkestein, confirmed on Monday that the Commission is currently studying the question of reduced VAT rates and has announced that it will make recommendations in this respect "during the first part of the year". He added that new provisions are expected to take effect in 2004. Mr Todd specified that the French dossier on VAT applicable to catering would take effect within the framework of such work, "covering reduced rates in general and in all Member States".