Brussels, 09/03/2004 (Agence Europe) - "One minute". This is the time spent by Ecofin Ministers of the reduced VAT rates dossier on Tuesday, according to an institution source after the work finished. This short time apparently allowed the European Commissioner for taxation, Frits Bolkestein, to thank the Irish Presidency for having so quickly taken up its work around the note published at the end of February by the Commission (see EUROPE of 20 February, p.11), in which the Commission stated that it believed there was some leeway to apply the principle of subsidiarity in VAT, as long as reductions do not threaten the functioning of the internal market and if they apply to services provided locally, such as restaurants and hairdressers.
The French minister of the economy, finance and industry, Francis Mer, declared in a fringe meeting that there had been rapprochement in this case close to the heart of his country (EUROPE 6 March p 9). After affirming that VAT had a role to play in the European area in order to avoid distortion to competition, Mer stated that this rule had not been applied to certain related services. He asked for all to be subject to behaving similarly and underlined that the European Commission "agreed" on applying a reduced tax in hotel and catering but admitted that the matter would be more difficult to solve with regard to records. Whatever happens, the different points will be discussed with the Commission and Member States, he affirmed. The Irish minister for finance Charlie McCreevy, who chaired the Council confirmed this. The latter explained that basically, a Council group had been set up to look at the VAT issue in more detail and that the subject would be on the ministers' table in May or June.