Brussels, 14/05/2008 (Agence Europe) - On Wednesday 14 May, European Finance Ministers once again failed to reach a unanimous decision on launching a pilot project allowing Austria to test a value added tax (VAT) reverse charge mechanism to tackle tax fraud more effectively. As at their March meeting, they were unable to adopt conclusions on the best way to tackle fraud which costs the European Union almost €200 million (see EUROPE 9615). The Slovenian Presidency deemed that there was no point in validating a text that did not contain a paragraph on the VAT reverse charge pilot project. No one was able to say on Wednesday when the issue would next be discussed in Council. European Taxation Commission Lásló Kovács said he would bring forward “ten proposals before the end of the year” on conventional measures to combat VAT fraud (see EUROPE 9624). He gave a warning, however, that he did “not expect miracles” from these measures.
Slovenian Finance Minister Andrej Bajuk said that, according to formal procedure rules, the Council, acting on a simple majority, could have asked the Commission to explore with Austria the possibility of launching this pilot project. “A Council invitation does not require unanimity, but, for the Commission project to become a reality, there has to be unanimity,” he said. In that case, what would be the point of spending time and resources preparing a project that would not see the light of day, since there would always be at least one member state opposed to its launch, the Commission wondered. On Wednesday, Spain, Portugal and the Czech Republic indicated their opposition to the launch of the pilot project.
Germany reiterated its backing for Austria's setting up a VAT reverse charge pilot project. “Conventional measures are not enough,” said German Finance Minister Peer Steinbrück. He said that several member states already applied a VAT reverse charge mechanism in certain sectors, such as the United Kingdom for mobile telephones. “Why deny Austria the opportunity to carry out a pilot project?” he asked. Austria, still wishing to carry out a full-scale test, appeared more hesitant, however, a European source said. The United Kingdom backed the launch of a pilot project. The Netherlands and Sweden did not express any objections. Finland, which had hitherto been reticent, said that it, too, could give its backing to the pilot project. (M.B.)