# CE2004078EN.01067501.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/675 |
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27.3.2004

EN

Official Journal of the European Union

CE 78/675

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(2004/C 78 E/0718)

WRITTEN QUESTION P-3918/03

by Georges Berthu (NI) to the Commission

(11 December 2003)

Subject:   Reduced rates of VAT

Subject:

Before the European Parliament on 3 December 2003, Commissioner Bolkestein stated that the Commission did not intend to submit any new proposal on extending reduced rates of VAT (particularly to work on homes or to restoration), as the Council has expressed reservations about its proposal of 7 July.

However, the proposal of 7 July was broader in scope, and particularly sought to eliminate exemptions, which is a controversial subject.

Would it not be desirable for the Commission to avoid conflicts and to act in accordance with the opinion of the European Parliament (Randzio-Plath report adopted on 4 December 2003, P5TA-PROV (2003) 0547), which wisely proposed extending the experiment with reduced rates of VAT on labour-intensive services, and increase the scope for States to apply reduced rates of VAT, particularly on restoration work?

Answer given by Mr Bolkestein on behalf of the Commission

(19 January 2004)

(19 January 2004)

On 16 December 2003, the Commission adopted a proposal for a Council Directive amending Directive 77/388/EEC (1) so as to extend the facility allowing Member States to apply reduced rates of VAT to certain labour-intensive services and a proposal for a decision extending the period of application of Decision 2000/185/EC (2) authorising Member States to apply a reduced rate of VAT to certain labour-intensive services in accordance with the procedure provided for in Article 28(6) of Directive 77/388/EEC (3).

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The extension is intended to allow the nine Member States which currently apply a reduced rate of VAT to labour-intensive services to continue to do so for a further two years up to 31 December 2005, under the same conditions, without altering or extending the scope of the experiment.

This should allow the Council the necessary time to reach unanimous agreement, on the basis of the original Commission proposal (4), on a decision on the future scope of reduced rates of VAT.

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The Commission's aim in its proposal of 23 July 2003 was to improve the internal market, notably by simplifying and rationalising the rates of VAT. It proposed in particular to include restaurant services, house repair, maintenance and cleaning services, and home care services in Annex H.

That proposal is still before the Council. It is now up to the Council to reach a final decision on reduced rates of VAT in the light of Parliament's opinion.

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(1)  Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, OJ L 145, 13.6.1977.

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(2)  Council Decision 2000/185/EC of 28 February 2000 authorising Member States to apply a reduced rate of VAT to certain labour-intensive services in accordance with the procedure provided for in Article 28(6) of Directive 77/388/EEC, OJ L 59, 4.3.2000.

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(3)  COM(2003) 825 final.

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(4)  COM(2003) 397 final.

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