# CE2004084EN.01072101.xml

| 3.4.2004 | EN | Official Journal of the European Union | CE 84/721 |
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3.4.2004

EN

Official Journal of the European Union

CE 84/721

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(2004/C 84 E/0810)

WRITTEN QUESTION P-1396/03

by Margie Sudre (PPE-DE) to the Commission

(10 April 2003)

Subject:   Uniform application of a reduced rate of VAT in the restaurant sector

Subject:

In its resolution of 14 May 2002, the European Parliament called on the Commission to ‘draw up at the earliest opportunity proposals to include the restaurant sector, and possibly other as yet ineligible tourist services, on the list of sectors of activity entitled to a permanent reduction in the VAT rate, so as to boost employment and modernisation in the industries concerned and make European tourism better equipped to deal with international competition’.

This reduced rate of VAT for the restaurant sector and other tourism services would enable the strong job-creation potential of tourism enterprises to be swiftly harnessed, and would constitute a vital asset for European tourism and economic activity in general.

The Commission's work programme for 2003 indicates that a proposal for a directive on the structure of reduced VAT rates, which aims to review the relevant rules so that a simpler and more harmonised structure can be introduced in the European Union, is scheduled for publication in June 2003.

Can the Commission confirm its intended timetable for this proposal for a directive?

Will the simplification and more uniform application of the Community VAT system which this proposal aims to put into effect satisfy the expectations expressed by the European Parliament (and in particular by France) that a reduced rate of VAT for tourism services be applied more broadly, and in particular in the hotel and restaurant sector?

Answer given by Mr Bolkestein on behalf of the Commission

(7 May 2003)

(7 May 2003)

As announced in its communication on the new VAT strategy (1) and mentioned in its report on reduced rates adopted in October 2001 (2), the Commission intends to carry out a comprehensive review of the structure of reduced rates in the first half of 2003. As part of this exercise, an examination will be made of the restaurant sector and all reduced rate applications from other categories. Several other sectors too have frequently expressed an interest in the use of tax incentives.

1

2

The Commission is currently conducting an evaluation, based mainly on reports by the Member States, of the experimental application of reduced rates on labour-intensive services. The participating Member States' evaluations were unable to clearly establish the link between a lower rate of VAT on labour-intensive services and job creation or a reduction in the underground economy.

The Commission confirms its intention to submit a proposal for a directive in mid-2003 which will comprehensively review reduced rates with a view to the simplification and more uniform application of VAT. The basic aim of this proposal is to improve the way the internal market operates by rationalising the use of reduced rates by Member States, avoiding potential distortions of competition by allowing Member States equal opportunity to apply reduced rates.

No decision has yet been taken on the review to be undertaken. Nevertheless, the Commission would draw the Honourable Member's attention to the fact that hotel services are already included in the list of goods and services eligible for a reduced rate (Annex H, category 11). Restaurant services, however, only qualify for the reduced rate in eight Member States, on the basis of special derogations granted to them.

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(1)  COM(2000) 348 final.

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(2)  COM(2001) 599 final.

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