WRITTEN QUESTION E-1631/02 by Theresa Villiers (PPE-DE) to the Commission. VAT and financial services.
Date: 2002-06-10
Institutions: European Parliament, Provisional data
Subjects: VAT, banking, fiscal policy, tax harmonisation, tax system

C 110 E/22

Official Journal of the European Union

EN

8.5.2003

300 meters are used. This regulation applies in practice to wreck gillnet fishing, in which particularly high
rates of by-catches had been observed. The Commission is not aware of any other Danish fisheries
regulation that would address specifically by-catches of harbour porpoises.

(1) OJ C 229 E, 26.9.2002, p. 93.
(2) OJ C 309 E, 12.12.2002, p. 81.
(3) Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora,

OJ L 206, 22.7.1992.

(2003/C 110 E/021)

WRITTEN QUESTION E-1631/02

by Theresa Villiers (PPE-DE) to the Commission

(10 June 2002)

Subject: VAT and financial services

The Commission began to study the feasibility of applying VAT to financial services,

1.
insurance,
applying VAT to financial services and what studies are still underway?

including
in 1993. Could it please indicate what studies have been completed on the feasibility of

Could the Commission state whether it has organised any conferences or seminars on the feasibility

2.
of applying VAT to financial services and what conclusions were drawn?

Has the Commission conducted any discussions (a) internally, (b) in the context of the European
3.
Union VAT Committee, or (c) with the Ecofin Council on the feasibility of applying VAT to financial
services, and, if so, what was the outcome?

Has the Commission had the opportunity to consider any reports by consultants on the feasibility of

4.
applying VAT to financial services and, if so, what was the outcome?

Is the Commission planning to bring forward any proposals on the application of VAT to financial

5.
services?

6.

Does the Commission believe that it would be desirable to apply VAT to financial services?

Could the Commission please indicate the composition of the European Union VAT Committee, the

7.
date of the next meeting and the subjects on the agenda for the next meeting?

Answer given by Mr Bolkestein on behalf of the Commission

(8 July 2002)

The Commission maintains the belief that VAT exemptions, in principle, should be minimised to the
greatest extent possible. By their nature they cause distortion and increase the burdens on industry and tax
authorities. The exemption for financial services is no exception to this policy.

Accordingly, the Commission engaged consultants Ernst & Young to identify possible ways for taxing
financial services, as the first part of an ongoing programme of research into the treatment of financial
services under the VAT regime. These studies, which included a simulation of a cash flow system of VAT
for these services, were completed in 1998. The resultant report is available on the Europa website (1).

Various conferences were organised with the participation of industry and Member States at that time. The
general view was that although a cash flow system would in principle ensure taxation of the supplies in
question,
its introduction and operation would entail considerable burdens on both industry and tax
authorities. There could also be a significant impact on prices for final consumers. Furthermore, although
the distortions presented by the current system would be addressed in respect of activity within the
internal market, major distortion could arise between Community based institutions and competitors based
in third countries.

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Official Journal of the European Union

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As a result the Commission has used this study as a basis to identify comparative approaches by other
VAT/goods and services tax (GST) systems and in particular it has explored with partners in the
Organisation for Economic Cooperation and Development
forum whether an international
approach to the treatment of cross border financial activity could be found.

(OECD)

No specific discussions have taken place in the VAT Committee or within the Council on this matter. The
Commission has identified this area as one which needs to be addressed under the New VAT Strategy (2)
which was launched in June 2000. It has not, however, been identified as a priority issue and no proposals
are anticipated in the immediate future.

The Union VAT Committee is composed of representatives from all Member States. Their role is to discuss
questions of interpretation of current VAT law. The next meeting will be in late November 2002 and the
Commission will send the Honourable Member a copy of the Agenda when it is finalised.

(1) http://europa.eu.int/comm/taxation_customs/publications/reports_studies/report.htm.
(2) COM(2000) 348 final.

(2003/C 110 E/022)

WRITTEN QUESTION E-1764/02

by Olivier Dupuis (NI) to the Commission

(19 June 2002)

Subject: Syria

On 29 May Mr Riad Turk, a Syrian dissident who has spent seventeen years in jail for his beliefs, appeared
before the State Security Court in Damascus (a special court that was set up in the early 1960s under the
state of emergency act, and whose authority is disputed) to answer charges of ‘trying to change the
constitution by unlawful means’, of ‘undermining the morale and image of the nation’ and of other crimes
of opinion. Like Mr Turk, any other dissidents, intellectuals and businessmen have been arrested and
accused of criticising the Syrian dictatorship. On coming to power, Mr Bashar Al-Assad announced the
start of a process of democratisation (an announcement which met with the enthusiastic support of the
international community), but the ‘new’ regime soon showed that it had no real intention of introducing
genuine economic or political reforms. Fundamental freedoms continue to be brutally suppressed and any
initiatives that do not originate in the corridors of power are still trampled underfoot. The latest wave of
repression carried out by this hereditary dictatorship resulted in the arrest of Mr Turk and of nine other
people who had criticised the government.

What initiatives has the Commission taken or does it intend to take to secure the immediate release of
Mr Turk and the other political opponents who have been arrested? Does the Commission not believe that
the ‘honeymoon period’ that the international community has accorded Bashar Al-Assad is no longer
justified and that the European Union should take note that the promises made by Mr Al-Assad were
nothing more than a web of lies. Lastly, does the Commission not believe that the circumstances merit its
sending a clear signal to the authorities in Damascus by putting the EU-Syria association agreement
negotiations on hold indefinitely?

Answer given by Mr Patten on behalf of the Commission

(12 July 2002)

The Commission participates fully in the Union’s endeavours to support human rights in Syria. Our aim is
to establish a constructive dialogue with the Syrian authorities on human rights issues on the basis of
principles expressed in the Barcelona Declaration. In this regard, Union Troika demarches were made after
the arrests of opposition personalities, including Mr Al-Turk, in August/September 2001, and after the
convictions of the two Members of Parliament, Mr. Al-Homsi and Mr Riad Seif in March/April 2002.