Brussels, 22/12/2006 (Agence Europe) - On Friday 22 December, the European Commission sent Reasoned Opinions to Austria, France and Italy because their VAT (value added tax) rules do not conform with EU legislation.
Austria. 1) The Austrian VAT rules provide for the application of reduced VAT rate to all transactions concerning the disposal of waste water and refuse. By applying this reduced rate of VAT, the Austrian VAT law breaches EU law because those transactions are not covered by the provisions of the Sixth VAT Directive relating to the application of reduced VAT rates (formerly Directive 77/388/EEC, which is now part of Directive 2006/112/EC). Under the Sixth VAT Directive, Member States may subject to reduced rates of VAT only services, not goods, supplied in connection with street cleaning, refuse collection and waste treatment. Austria is being sent a Reasoned Opinion. 2) Since 1995, Austria has been levying non-deductive Austrian VAT on car related expenditure incurred outside the country (taxable individuals leasing cars in other Member States). The Commission believes this infringes EU case law (Case C-155/01, Cookies World Vertriebsgesellschaft v. Finanzlandesdirektion für Tirol). Despite moves by Austria to restrict the application of this measure, it is being sent a Reasoned Opinion.
France. The Commission has decided to send France a Reasoned Opinion because it applies cut-rate VAT (5.5%) to services provided by lawyers within the framework of legal aid ("aide juridictionnelle"), whereby some or all of the services are paid by the state. However, under the Sixth VAT Directive, legal services are not listed as being eligible for cut-rate VAT, explains the Commission, arguing that applying the standard VAT rate to legal aid is compatible with France's desire to grant legal aid and facilitate the access to legal advice for the less well-off.
Italy. Under the Finance Act 2004, the Italian Government extended until the year 2002 the tax amnesty (the “condono”) adopted under Finance Act 2003. The Finance Act 2003 allows taxpayers to 'regularise' various unpaid taxes, including VAT. According to these fiscal arrangements if a taxable person makes use of the amnesty for a certain taxable year the Italian administration waives its right to control in the future VAT which was not paid for that period. The taxpayers may “wipe the slate clean” by simply paying to the State a fixed sum, if no return was filed, or a percentage (2%) of the VAT that would have been payable in respect of the goods and services supplied in each taxable year. The Commission considers that this scheme breaches the 6th VAT Directive and is taking Italy to the European Court of Justice (Case C-132/06). In the Commission's view, the measures adopted by Italy go beyond the bounds of Member States' discretion when adapting controls on the basis of human and technical resources available to them. This particular Reasoned Opinion relates to VAT arrangements covered by the 'condono' (up until 31 December 2002). (mb)