WRITTEN QUESTION E-3944/00 by Christopher Huhne (ELDR) to the Commission. Variable VAT rates.
Date: 2000-12-13
Institutions: European Parliament, Provisional data
Subjects: VAT rate, application of EU law, local government, regional government

19.6.2001

EN

Official Journal of the European Communities

C 174 E/197

up to a 12-mile limit from their baselines. It is clear, according to a consistent case-law of the Court of
Justice, that the Common Fisheries Policy applies not only to the territorial seas but also to all areas where
Member States are able to exercise fisheries jurisdiction under international law (i.e. also in their exclusive
economic or exclusive fishery zones). The Common Fisheries Policy thus applies in all coastal State waters.
This is confirmed by Article 1 of the basic fisheries Regulation (Council Regulation (EEC) No 3760/92 of
20 December 1992 establishing a Community system for fisheries and aquaculture (1)) which provides:
(cid:145)The common fisheries policy shall cover exploitation activities involving living aquatic resources, and
aquaculture, as well as the processing and marketing of fishery and aquaculture products where practised
on the territory of Member States or in Community fishing waters or by Community fishing vessels.(cid:146) In the
same Regulation (cid:145)Community fishing waters(cid:146) are defined as (cid:145)the waters under the sovereignty or jurisdic-
tion of the Member States(cid:146) (Article 3(a)).

(1) OJ L 389, 31.12.1992.

(2001/C 174 E/208)

WRITTEN QUESTION E-3944/00

by Christopher Huhne (ELDR) to the Commission

(13 December 2000)

Subject: Variable VAT rates

Will the Commission please state what restrictions are imposed by EU law on the freedom of regions or
local authorities to levy variable VAT rates should they so desire?

Answer given by Mr Bolkestein on behalf of the Commission

(8 February 2001)

According to the Community legislation on VAT which is currently in force, Member States must apply a
single standard rate to all goods supplied and all services provided. They also have the power to institute
either one or two reduced rates.

Save in the case of specific derogations concerning the approximation of VAT rates granted during the
negotiations on Directive 92/77/EEC (1), these rates must be applied throughout the entire territory of the
Member State.

VAT is a general tax, which is intended to apply to all economic transactions within the Member State
concerned. The tax is proportional to the price of goods and services. It is levied at every stage in the
production and distribution process, and its impact is passed on to the consumer.

Moreover, the measures which Member States take in this respect cannot be allowed to endanger either the
free circulation of goods or the proper functioning of the single market.

VAT is also subject to the principle of a single rate, namely, that identical goods or services cannot be
taxed at different rates.

For all these reasons, regional and local authorities cannot be empowered to set variable rates of VAT, for
this might undermine the neutrality of the tax.

(1) Council Directive 92/77/EEC of 19 October 1992, supplementing the common system of value added tax and

amending Directive 77/388/EEC (approximation of VAT rates); OJ L 316, 31.10.1992.