Luxembourg, 07/06/06 (Agence Europe) - On Wednesday, the Ecofin Council failed to mark the political agreement on the legislative package aiming to simplify obligations on declarations of value-added tax (VAT). The only decision taken on 7 June concerns the extension, for six months, of directive 2002/38/EC on VAT rules applicable to radio-broadcasting and television services, and to certain electronic services. This extension will avoid a legal vacuum as of 1 July 2006, when this directive is due to expire. The short timescale is of satisfaction to the Commission. It obliges the Member States to turn again to this dossier under the Finnish Presidency.
"We have failed to reach" an agreement on this legislative package, and "we knew it even before the meeting", Karl-Heinz Grasser told the press on Wednesday. The President of the Ecofin Council spoke of "very strong support" to the compromise proposal of the Austrian Presidency from "more than 20 Member States", whilst recognising that "Germany, Luxembourg and Portugal are still having problems", even though "Germany and Portugal"showed a certain amount of openness during the discussions. Peer Steinbrück, the German Finance Minister, made a link between the legislative package on the table and Germany's wish to apply the reverse charge mechanism system to VAT in order to improve its fight against tax fraud (see EUROPE 9202). The Ecofin Council therefore calls on the Commission to present a "proposed directive" in the very near future, giving the Member States the option to implement such a mechanism if they so wish, said Mr Grasser.