Brussels, 24/07/2007 (Agence Europe) - On Tuesday 24 July, the European Commission sent two “reasoned opinions” (second step of the infringement procedure provided for in article 226 of the EC Treaty) to the United Kingdom, Germany and Sweden to change their legislation on the VAT exemption for postal services which, according to the Commission, is not compatible with the EU's VAT directive currently in force. If the three countries do not amend their legislation, the Commission may decide to refer the matter to the European Court of Justice. In a press release László Kovács, the European commissioner for taxation and customs, stated: “The VAT exemption for postal services is still part of Community rules and should be applied in a way that minimises distortions of competition between former monopolies and market entrants so as to ensure that all operators enjoy the freedom to provide postal services across Europe".
According to the Commission, the United Kingdom and Germany's VAT exemptions for all or the majority of postal services provided by former monopolies distorts competition They do so on the grounds that those operators have been assigned particular obligations with regards to the provision of the universal postal service. Other postal operators are required to charge VAT on their services. “Paradoxically, some of the operators (former monopolies) who benefit from this tax advantage at home are now expanding across Europe and facing and complaining about unequal tax treatment in these new markets”, affirms the Commission in a press statement. The Commission is arguing that in the context of competitive postal markets, different tax liabilities are bound to distort competition and can only be justified as regards the strict discharge of the universal service obligation. According to the Commission, this is not the case in the United Kingdom and Germany.
Contrary to the United Kingdom and Germany, Sweden does not exempt postal services. All operators including the one entrusted with the provision of the universal service - Posten AB - must charge VAT for all services. While in so doing Sweden has ensured that VAT does not distort competition, it has nevertheless “failed to apply an exemption which remains in Community legislation and must be applied in a harmonised manner across the Community”, explains the Commission. (hb)