EN Official Journal of the European Union CE 88/521

(2004/C 88 E/0534)

WRITTEN QUESTION P-0822/04

by María Sornosa Martínez (PSE) to the Commission

(8 March 2004)

Subject: Distortion of competition by Poland in respect of other EU products

I have obtained information indicating that the Polish Government plans to modify VAT so as to vary the rate applicable to citrus fruits, raising it from the current 7 % to 22 %. This draft Polish legislation (draft 1874 of the bill in question), and specifically Article 36 thereof, will significantly increase consumer taxes on citrus fruit and other imported products. This bill, which is awaiting ratification by the Polish Senate, severely distorts competition by favouring local products to the detriment of products from the rest of the Union, and specifically citrus fruit, which is already discriminated against, since citrus fruit coming from other EU countries is currently taxed at 7 %, while other, similar local products are taxed at only 3 %.

Given Poland's imminent accession to the EU how does the Commission intend to approach Poland with a view to avoiding possible violation of Community competition law?

Joint answer

to Written Questions E-0715/04 and P-0822/04

given by Mr Bolkestein on behalf of the Commission

(5 April 2004)

According to Article 12 of the Sixth VAT Directive (1), Member States have to apply a standard rate not lower than 15 % and may apply one or two reduced rates not lower than 5 %. In principle, those reduced rates shall apply only to supplies of the categories of goods and services specified in Annex H of the Directive. The first category in that Annex includes foodstuffs for human and animal consumption.

Poland has been authorized, under the Accession Treaty, to apply a super reduced rate of 3 % until 30 April 2008. Of course, Poland may apply this rate but always in conformity with Community law. In particular, the principles underlying the VAT system and the provisions of the EC Treaty must be respected.

The Commission has already received information according to which the draft Polish VAT Law provides for a super reduced rate of 3 % (which will be raised up to 7 % by 30 April 2008) to be applied to fruit in general, except for kiwis, papayas and other ‘Southern fruit’. These latter products, which include some types of fruit which are not grown in Poland and which are imported into that country from some Member States (in particular, citrus fruits), are to be subject to the standard rate of the tax (22 % in Poland, according to the draft Law).

Such a scheme could be in breach of Community law.

For that reason, the Commission has already sent a letter in this respect to the Polish authorities, stating that:

(i) The scheme seems to run counter to Community law, and in particular to the principle of neutrality which underlies the VAT system and to Article 90 of the EC Treaty, given its protective effect. Indeed, according to this Article, no Member State may impose on products coming from other Member States higher taxes than those imposed on similar or competing national products.

(ii) According to the information at the disposal of the Commission, the draft VAT Law is at an advanced stage in the legislative process and, for that reason, the issue should be addressed as soon as possible.

(iii) The Commission remains at the disposal of the Polish authorities in case they would like to send further information or in order to discuss the matter.

The Commission expects that the Polish authorities will adopt the necessary measures in order to ensure that the draft VAT Law complies with the requirements of Community Law.

(1) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization 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, as last amended by Council Directive 2004/15/EC of 10 February 2004, OJ L 52, 21.2.2004.