Brussels, 20/04/2007 (Agence Europe) - The EU Council of Ministers reached a political agreement on 16 April on the proposal to adapt the own resources system of the EU budget to the conclusions of the European Council of December 2005 on the financial perspectives 2007-2013. The Council still has to formally adopt this decision that has been blocked for months due to the fact that the conclusions of the European Council have been interpreted in different ways (EUROPE 9219).
During the compromise on the financial framework for 2007-2013, the United Kingdom had already agreed to reduce the amount of its cheque by €10.5 billion over the period 2007-2013 in order to fully participate in the cost of the 30 April 2004 enlargement (except agricultural spending). In the event of further enlargement before 2013, not including accession by Bulgaria and Romania, the amount would be adjusted in consequence, as set out in the draft decision.
After long months of opposition to the idea, the United Kingdom has finally agreed to take into account budgetary donations granted to the largest net EU contributors when calculating its rebate. We recall, for example, that the decision gives four member states (Germany, Austria, the Netherlands and Sweden) reduced VAT call rates and grants a gross reduction in annual contributions from the Netherlands (€605 million) and Sweden (€150 million). To offset the fact that these amounts are taken into account, the United Kingdom has managed to have a mechanism set in place to combat VAT fraud in the field of consumer electronics (see EUROPE 9408). London, in fact, has discovered massive VAT fraud costing it billions of euro each year. The ruse, used by fraudsters within a company established in an EU member state, consists of buying high value added goods which are easy to transport to another country - such as mobile phones, electronic components, micro-computers - as there is no VAT on sales between EU countries. The company resells the goods to another company established in the same country as itself but does not declare VAT, thus cheating the tax administration, before disappearing after pocketing the VAT amount. A third company has the right to deduct the amount of VAT imposed on goods. To put an end to such practice, the United Kingdom has achieved derogation from the system of own resources: - as of 1 June it will be possible to introduce a reverse charge mechanism on the products, which will allow VAT to be levied on the final purchase of the product. (lc)