Brussels, 20/01/2009 (Agence Europe) - French Finance Minister Christine Lagarde said on Tuesday 20 January, that progress had been made in discussions on reduced rates of value added tax (VAT) with her German counterpart Peer Steinbrück, with whom she had held a bilateral meeting on the sidelines of the Ecofin Council. “I believe that we have here the basis of a solid agreement with our German partners,” she told press before leaving Brussels. During the meeting, the ministers outlined a solution to the problem of how to deal with labour-intensive services, which also include catering. Allowing those member states which wish to apply reduced VAT rates to catering has long been a French wish, and one to which Germany has never wanted to agree. Steinbrück confirmed that “Germany was disposed to a compromise”, including on catering.
At discussion in the Ecofin Council, the German minister noted the European Council's desire for a targeted political agreement dealing exclusively with certain sectors. This was not carte-blanche, he warned. Steinbrück also underlined the importance for Germany of developing an overall approach to reduced indirect taxation in Europe. In short, it would be better to debate all the issues, those on the table and those being prepared, including those on green products and services. Steinbrück did not want a text that was like a “Christmas tree” nor any chopping up of the proposals, a French diplomat said. The European Commission view was more severe: the German minister had been agitating for some time for an overall package with the sole aim of delaying an agreement on reduced VAT rates to be applied to labour-intensive services. The Commission will not, it appears, be able to make any proposals for a directive on energy efficient products and services before March, preferring to include a possible legislative initiative in a package on green taxation, covering a review of the rules on the taxation of energy products.
France pointed out how urgent the dossier was in so far as it is part of the measures contained in the European recovery plan, an argument that did not leave Sweden indifferent. Lithuania said it had done away with all the reduced rates that it had applied. Poland and Malta stressed it was important there should be equal treatment by member states. Agreeing with Germany, Denmark also gave its support to the roadmap that the Czech Presidency presented to delegations with a view to reaching a political agreement in March (see EUROPE 9820). “The Council agrees with the procedure” proposed, welcomed the Czech finance minister. The Czech Presidency would be quite happy to have an a minima agreement on a dossier that it has inherited against its wish. (M.B./transl.rt)