Strasbourg, 16/01/2004 (Agence Europe) - In its adoption of the report by German Social Democrat Christa Randio-Plath, the EP has approved the extension by two years until 31 December 2005, of the facility to allow Member States to apply reduced rates of VAT for certain labour-intensive services. The issue will be on the agenda of next Tuesday's Ecofin Council (see EUROPE of 19 December, p.9, for the European Commission's proposal). The Parliament also pointed out that it believes that three years is not enough o assess the experiment of applying reduced rates. French Socialist Pervenche Bérès pointed out that this measure had had remarkable effects in France in fighting undeclared work, and several French companies believes that 50,000 jobs have been created due to this reduced VAT.
Reduced VAT relates to nine countries: France, the United Kingdom, Italy, Spain, Portugal, Belgium, Netherlands, Luxembourg and Greece. The services in question include: small repair services (bicycles, shoes and leather goods, clothes and household linen), refurbishment and repairs to private dwellings (with the exception of the material), home care services, window and domestic cleaning, hairdressing.