Brussels, 19.07.2004 (Agence Europe) - The European Commission has amended its proposal of directive on VAT on postal services, bearing in mind some of the Parliament's amendments. It takes on board the 10 kg limit for parcels above which a reduced rate of VAT will be applied.
The directive will make it compulsory for public companies that used to be exempted to impose VAT on postal services. The proposal could have the effect, on one hand, that public and private postal delivery services will be placed on an equal footing, and, moreover, that public services are allowed to be reimbursed for VAT for costs and supplies.
The European Parliament had adopted its position in March after considerable developments: rejection of the whole proposal in December 2003 under pressure from the left that felt the measure would put postal prices up, a further rejection in parliamentary committee, and, finally, rejection of the rejection in plenary. In March, most MEPs finally voted in favour of applying VAT to postal services under pressure from the EPP and Liberals this time.
They nonetheless requested a derogation for envelopes and parcels containing ordinary mail, mailing, books, catalogues and newspapers weighing less than 10 kg, instead of 2 kg as stipulated in the initial proposal.
The Commission accepted this change and took it on board in its amended proposal. It also postponed the date when it should take effect till 1 January 2007. On the other hand, it said nothing about reimbursing VAT to charity associations.