Brussels, 01/12/2005 (Agence Europe) - In Brussels on 1 December, the European Parliament debated a series of questions relating to VAT, on the basis of two reports by Zsolt László Becsey (EPP-ED, Hungary) and an oral question from Pervenche Berès (PES, France), president of the economic and monetary committee.
Pervenche Berès raised the tricky question of whether or not to extend the experiment launched six years ago in nine Member States (Belgium, Greece, Spain, France, Italy, Luxembourg, Netherlands, Portugal and United Kingdom) of applying a reduced rate of VAT to certain high in the labour-intensive services. This provision expires on 31 December, and the forthcoming Ecofin Council of 6 December is set to reach an agreement on this issue (which requires unanimity). What Ms Berès is concerned about is that "some of the Member States will get involved on strictly national bases and block a system which has, broadly, proved its worth" in terms of job creation, the fight against illegal labour and a coherent organisation of taxation at Member State level. She therefore fully supports the efforts of the Luxembourg and UK Presidencies, which have made "well-balanced proposals" to reach an agreement at the Council (EUROPE 9045), and hopes "at the very least" that if the Presidency's compromise cannot be accepted, the Council will decide to extend the current provisions for at least a year. In response, Commissioner Kovács acknowledged that "it would be entirely regrettable, in terms of legal security, if there was not an agreement in December". Whilst recognising that there were "good arguments in favour of the status quo", Mr Kovács added that "simply proroguing the status quo (...) stands no greater chance of being adopted by the Council than the UK compromise", he continued. Furthermore, extending a proposal which is applicable in just nine States would create inequalities. He feels that the proposal of the Presidency to prolong the possibilities of derogations for the new Member States "could better serve the objective". "The ball is now in the Council's court and the Commission will do all in its power to facilitate an agreement on the basis of the UK compromise", he concluded.
As for the Becsey reports, the first tackles the minimum level for a normal rate of VAT on the EU, which is currently set at 15%. This regime expires on 31 December 2005, and the Commission proposes to extend it until 2010. "This text must be adopted as a matter of urgency", warned Commissioner Kovács, "unless we want a legal void" on 1 January 2006. The report recommends that this extension be approved, but opinions differ more on the question of a maximum VAT level. Some MEPs would like to see a limit of 25% brought in (currently, Cyprus and Luxembourg apply a rate of 15% whereas Denmark, Hungary and Sweden are at 25%, with the other States somewhere in between), whereas others prefer not to agree on a maximum rate, but instead to provide for "differentiations in rates, particularly for employment reasons". The rapporteur also calls on the Commission to carry out a general assessment of the macro-economic impact of the different rates of VAT on the Member States, for 2007.
The second Becsey report deals with modalities for VAT reimbursement, particularly for companies established in another Member State. This issue is part of the more general legislative package presented by the Commission in 2004, and aiming to simplify VAT obligations on the field of cross-border operations. The report proposes a simplification of the procedure by which VAT is reimbursed, particularly for small and medium enterprises trading outside the borders of their country of origin, and which still do not have the management resources or the computer equipment necessary for the VAT to be reimbursed. The report also suggests that requests for reimbursement be dealt with by the Member State in which VAT is paid, and proposes a few amendments on the more specific issue of lead times for the reimbursement.
EUROPE will return on the votes.