WRITTEN QUESTION P-4070/00 by James Fitzsimons (UEN) to the Commission. VAT on solar panels and encouraging greater use of vegetable oils for fuels.
Date: 2000-12-20
Institutions: European Parliament, Provisional data
Subjects: VAT, environmental protection, solar collector, substitute fuel, tax relief

C 187 E/126

Official Journal of the European Communities

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3.7.2001

Competitive pressures among supermarket chains and the like will oblige the leading players to
2.
arrange the changeover to euro pricing so that consumers do not suffer. Similarly, local shops, which
benefit from customer confidence, will do their utmost to ensure that their customers cannot accuse them
of raising prices unexpectedly and do not abandon them for supermarkets. Several market leaders in
a number of countries in the euro area are even planning to freeze prices for several months at the end of
2001 and the beginning of 2002. Also, a majority of shops in the participating Member States already
practise dual pricing and their numbers will increase steadily as the different deadlines approach. Under the
auspices of the Commission, an agreement has been reached between consumers and businesses on use of
the (cid:145)euro logo(cid:146) with a view to promoting voluntary dual pricing and application of best practices. The
agreement is in force in most Member States in the euro area.

Dual pricing allows consumers and, where appropriate, specialised national or regional control bodies to
check that there are no hidden price rises on the occasion of the changeover to the euro. It was with this
in mind that the Commission also advocated the setting up of local observatories for monitoring the
introduction of the euro (Article 2 in particular of Recommendation 98/228/EC of 23 April 1998 (1)),
something which has been done in most Member States in the euro area.

Lastly, the early setting of euro prices in the third quarter of this year, called for by the Commission in its
Recommendation of 11 October 2000 (2), will also help to achieve this same objective. The problem, if
there is one, would probably, therefore, be confined to the sectors with little exposure to competition
where some shops would not introduce dual pricing.

The freedom to set prices is a basic principle underlying the operation of the single market. By
3.
contrast, the rounding rules for conversion from national currency units to the euro are laid down in
Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of
the euro and are mandatory. Businesses must, therefore, comply with the rounding rules when applying
dual pricing. Together with the signatories to the (cid:145)euro logo(cid:146) agreement, the Commission is looking into
ways of reinforcing the agreement as regards overall price stability along the lines of the rules in force in
Spain and Ireland. Measures permitting rapid monitoring of price changes in early 2002 will also be
examined with the Member States.

Any price adjustments will primarily affect, on a one-off basis, products and services for which
4.
(cid:145)psychological(cid:146)
(or round) prices are set. New (cid:145)psychological(cid:146) prices in euros may involve upward or
downward adjustments. There are no grounds at present for claiming that there will be a uniform upward
adjustment. Historical precedents (e.g.
the pound sterling) did not produce
the decimalisation of
a significant upward movement in prices.

5.
The Commission does not believe that such a risk exists. If there is a short-lived increase in prices,
something which the explanations given above and surveys among sectoral associations would seem to
rule out, it will be very small, with any upward adjustments being statistically offset by any downward
adjustments. There would not, therefore, be any inflationary movement, this being defined as a continuous
rise in all prices. Accordingly,
it is unlikely that such a cyclical adjustment in prices could jeopardise
individuals(cid:146) purchasing power.

(1) OJ L 130, 1.5.1998.
(2) OJ C 303, 24.10.2000.

(2001/C 187 E/133)

WRITTEN QUESTION P-4070/00

by James Fitzsimons (UEN) to the Commission

(20 December 2000)

Subject: VAT on solar panels and encouraging greater use of vegetable oils for fuels

As a means of promoting environmentally friendly technologies, does the Commission have any plans to
bring forward special proposals aimed at introducing either a zero rate of VAT for solar panels or

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Official Journal of the European Communities

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establishing a specially low VAT rate in order to encourage greater use of non-polluting energy sources
and to reduce the use of materials which give rise to pollution and will the Commission outline what its
present and future plans and incentives are for encouraging greater use of oils derived from vegetables
which can be used in motor vehicles and commercial fleets?

Answer given by Mr Bolkestein on behalf of the Commission

(1 February 2001)

The situation under current Community VAT legislation is that category 9 of Annex H of the 6th Council
directive 77/388/EEC (1) covers the (cid:145)supply, construction, renovation and alteration of housing provided as
part of social policy(cid:146). Member States may therefore allocate a reduced VAT rate of no less than 5 % to these
services.

Solar panels, once incorporated into this global process, are automatically covered by this provision, just as
all building material when they are supplied as a part of a service provided by a building contractor.
Whereas the same goods when bought across the counter by an individual are considered as supply of
goods, and therefore the standard rate applies.

As far as the zero rate is concerned, it must be noted that it is an exception to the normal rules which
foresee that the standard VAT rate should apply to any taxable transaction as a consumption tax.

As the Honourable Member will know, the new VAT strategy (2) foresees that a review and rationalisation
of the rules and derogations applying to the definition of reduced VAT rates should be considered in the
medium term. Particular attention will be paid to the rates applying to the use of reduced VAT rates in
Community policies (e.g. to help protect the environment, etc.).

(1) OJ L 145, 13.6.1977, Directive as last amended by Council Directive 2000/65/CE, of 17 October 2000 (OJ L 269,

21.10.2000).

(2) COM(2000) 348 final.

(2001/C 187 E/134)

WRITTEN QUESTION P-4071/00

by Mar(cid:237)a Sornosa Mart(cid:237)nez (PSE) to the Commission

(20 December 2000)

Subject: Commission intervention in connection with the Jœcar-Vinalop(cid:243) diversion (Spain)

At the end of October 2000 the Commission was looking into the environmental impact of the Jœcar-
Vinalop(cid:243) diversion project, having received a complaint in addition to my own series of written questions.
As part of its investigations, the Commission had asked the Spanish authorities for their remarks on the
project and on the application of the Birds Directive in this case.

Nevertheless, the Spanish Environment Ministry recently approved the commencement of work on the
project.

Can the Commission say what stage has been reached in its investigations into the environmental impact
of the Jœcar-Vinalop(cid:243) diversion?

Is the Commission aware of the Spanish authorities(cid:146) approval of these works?