Brussels, 04/07/2007 (Agence Europe) - As he announced last week before the European Parliament (see EUROPE 9458), Commissioner Kovács, who is responsible for taxation issues, will present a proposed directive on Thursday 5 July, authorising the member states which joined the Union in 2004 to continue to apply certain reduced rates of value added tax (VAT). This legislative proposal, which aims to modify directive 2006/112/EEC on the VAT system, will accompany the communication which will relaunch the political debate in this area (see EUROPE 9460). It is unlikely to prove controversial for the member states, as it is a question of extending exemptions which expire at the end of 2007 until the end of 2010, this new date corresponding to the application of reduced rate of VAT to certain highly labour-intensive services (annex IV of directive 2006/112/EEC).
Sectors of activity which will be a focus of the coming political discussions, such as catering services and the housing sector, may continue to benefit from reduced rates in the following member states: Cyprus, the Czech Republic, Poland and Slovenia. The same will go for highly reduced rates for foodstuffs, books and pharmaceutical products in Cyprus, Malta and Poland. The following derogations, on the other hand, will not be extended: - those granted to the Czech Republic and/or Estonia concerning natural gas, electricity, urban heating and supplies of heating would which come under the general regime of directive 2006/112/EEC; - those granted to Estonia for coal, coke, fuel and petroleum, and which come into conflict with other Community policies; - those granted to Poland on a super-reduced rate of VAT for the provision of goods and services used in agricultural production and which come under the general regime (annex III of the directive); - those which Hungary and Slovakia have already rejected as obsolete. (mb)