Brussels, 01/02/2006 (Agence Europe) - A crucial meeting between Chancellor Schüssel, the President of the Ecofin Council Karl-Heinz Grasser, Polish Finance Minister Zyta Gilowska and Commissioner Laslo Kovaks on reduced rates of value added tax (VAT) was scheduled for Wednesday afternoon in Vienna. The meeting was to lift the Polish veto on the agreement reached between 22, then 24, Member States to along with the extension of reduced VAT rates for certain labour-intensive services (see EUROPE 9121). At the time of going to press, the outcome was not known.
On Tuesday, Poland softened its stance and made two precise requests of the Commission: 1) to give its definition of social housing in a written declaration; 2) to carry out before the end of June 2007 a review of tax exemptions granted to new Member States. When questioned on Wednesday about these requests, the spokesperson of Laslo Kovaks said that every two years the Commission published a report on the application of reduced VAT rates in the Member States which had opted for such measures, in line with Article 12 of Directive 77/388/EEC (called the sixth VAT Directive). The European Commission could also use the letter sent on Monday to the Polish authorities to give a statement of its interpretation of the social policy in the area of housing, the Commission has indicated. In this letter, Mr Kovaks explains how European legislation allows reduced VAT rates in the housing sector and gives assurances that the proposed study on the economic impact of reduced rates, expected by the end of June 2007, would cover the whole housing sector.
On Wednesday at the meeting of the college of Commissioners Mr Kovaks gave an update on the ongoing discussions and said he was about to leave for Vienna. The Commission decided to await the outcome of this last-chance meeting before announcing later in the week possible infringement procedures against nine Member States (Belgium, Spain, France, Greece, Italy, Luxemburg, the Netherlands, Portugal and the United Kingdom) who would be in breach of European legislation.