WRITTEN QUESTION E-1282/01

by Theresa Villiers (PPE-DE) to the Commission

(3 May 2001)

Subject: Property taxation

Speaking at a Belgian Presidency tax seminar on 26 March 2001, the Director-General for Taxation and the Customs Union, Michel Vanden Abeele, suggested that there was an intermediate zone where there is currently no tax harmonisation but where the need for harmonisation could be discussed, such as company taxation, which the Commission was actively looking at, and also property taxation.

1. What steps has the Commission taken so far in order to consider whether there is a need for harmonisation of property taxes?

2. Has the Commission followed up the study performed for the Commission by Arthur Anderson, Study on the application of Value Added Tax to the property sector (N XXI/96/CB-3021) and if so, what conclusions has it drawn?

3. If the Commission is considering the need for harmonisation of property taxation, could it indicate precisely which areas it is looking at? Is the Commission primarily concerned with the VAT system and VAT rates on building land, supplies of new buildings or renovation and repairs, for example, or is it also considering harmonisation of levies of real estate transfer taxes or stamp duties? What does the Commission believe is the best way to proceed with property taxation?

4. The study by Arthur Anderson identified some problem areas and perceived distortions in the UK. On VAT provisions the study found numerous problems of interpretation involving provisions on protected buildings, relevant charitable buildings and rent adjustments on disposal of buildings, for example. It also perceived a distortion under the option to tax regime, whereby a landlord has to opt to tax all leases in a building or none of them. Has the Commission considered any of these problem areas or perceived distortions, and would they fall under the scope of any Commission proposals in this field?

Answer given by Mr Bolkestein on behalf of the Commission

(14 June 2001)

In his contribution to the seminar on the 2001 Belgian Presidency, on 26 March 2001, the Director-General for Taxation and the Customs Union stated that an intermediate zone, in which some coordination is needed, concerns direct taxation applied to highly mobile tax bases, such as company taxation and capital taxation (translation of the French text of the transparency he used).

In his oral presentation, in French, Mr Vanden Abeele used the words taxation mobilière (taxation of movable assets), not taxation immobilière (taxation of immovable assets, or property taxation).

Property taxation was not mentioned. The Commission has no intention of carrying out any harmonisation of direct taxation, although as part of a system of VAT taxation at source, which remains our long-term objective, Community rules on VAT applicable to the property sector would, of course, need to be revised.

As to the study conducted by Arthur Andersen to which the Honourable Member refers, the Commission takes the view that the results do not make the case for the need for legal initiatives in the short term to modernise and simplify the existing VAT system. This view is supported by reactions from representatives of the sector concerned.

The transparencies used in the presentation have been sent directly to the Honourable Member and Parliament's General Secretariat.