Brussels, 16/12/2005 (Agence Europe) - On Friday evening, the European Council had still not begun discussion (requested by France) on reduced VAT rates, as the British Presidency had decided on Thursday evening to postpone the debate till the end of the summit. Adoption of the new British compromise on a reduced rate system presented to Coreper on 14 December depended on the result of negotiations on financial perspectives (see other article). The new British proposal provides for renewed application till 31 December 2010 of Annex K of the 6th VAT directive which sets out the list of sectors where States may apply reduced rates on a temporary basis (such as high labour intensive services) and allowing such derogations to be extended to all Member States. To date, only nine Member States have benefited from these exemptions by way of an experiment launched six years ago and renewed twice since then (France, Belgium, Greece, Spain, Italy, Luxembourg, Netherlands, Portugal, United Kingdom). The move forward in the British proposal is the inclusion of catering services in Annex K, which France had pressed for (a reduced VAT rate in catering had been one of the promises made by Jacques Chirac during the last French presidential campaign). Any Member State not yet applying Annex K or a reduced rate of VAT for catering but having the intention to do so should notify this to the European Commission by 15 February 2006. The new Member States, that already have temporary exemptions from their accession on 1 May 2004, may continue to apply reduced rates and exemptions in force until 31 December 2015. On Wednesday, at Coreper, the British Presidency had not been the subject of any special objection raised by Member States but Germany had not taken a stance considering that the issue should be settled at the summit (see EUROPE 9089).