Strasbourg, 11/12/2007 (Agence Europe) - On Tuesday 11 December, the European Parliament adopted the consultative report by Ieke van den Burg (PES, Netherlands), approving the extension, until the end of 2010, of certain lower rates of value added tax (VAT) negotiated by five member states when they joined the EU in 2004. Last week the Ecofin Council gave its unanimous approval (see EUROPE 9559). As part of the drive to simplify and rationalise the confusion of European reduced rates of VAT, the Commission is to draw up specific draft legislation in 2008.
MEPs accepted the amendments brought by the economic and monetary affairs committee (see EUROPE 9550). They felt, in particular, that, in line with the principle of subsidiarity, member states should have sufficient room for manoeuvre in setting VAT rates for locally provided services which had no impact on intra-Community trade. Member states, they said, should be allowed to apply reduced rates, or possibly even zero rates in exceptional circumstances, to “basic goods and services, such as food and medication, for clearly defined social, economic and environmental reasons for the benefit of the final consumer”.
The extension of reduced rates affects: - the 5% rate on the supply of construction work in the private dwellings sector in the Czech Republic and Slovenia; - catering services at reduced rates of at least 5% and 7% in Cyprus and Poland respectively; - tax exemption on the delivery of foodstuffs and pharmaceutical products for Malta. (M.B.)