Proposal for a Council Decision extending the period of application of Council Decision 2000/185/EC authorising Member States to apply a reduced rate of VAT to certain labour-intensive services in accordance with the procedure provided for in Article 28(6) of Directive 77/388/EEC
Date: 2002-09-25
Institutions: European Commission
Subjects: EU Member State, EU employment policy, VAT, VAT rate, provision of services, tax harmonisation

C 20 E/214

EN

Official Journal of the European Communities

28.1.2003

for a Council Decision extending the period of application of Council Decision
Proposal
2000/185/EC authorising Member States to apply a reduced rate of VAT to certain labour-intensive
services in accordance with the procedure provided for in Article 28(6) of Directive 77/388/EEC

(2003/C 20 E/20)

COM(2002) 525 final

(Submitted by the Commission on 25 September 2002)

EXPLANATORY MEMORANDUM

On 22 October 1999, as part of its implementation of the recommendations of the European Council of
11 and 12 December 1998, and in particular the ‘Vienna Strategy for Europe’, the Council adopted
Directive 1999/85/EC (1) amending Directive 77/388/EEC (2) (the 6th VAT Directive) as regards the possi-
bility of applying on an experimental basis a reduced VAT rate on labour-intensive services. Its purpose is
to allow Member States that so wish to test the impact, in terms of job creation and a reduction of the
underground economy, of a targeted reduction of VAT on these services.

Under Article 28(6) of the 6th VAT Directive as amended by Directive 1999/85/EC, any Member State that
wished to introduce this measure was required to inform the Commission before 1 November 1999. Nine
Member States did so. Their applications were the subject of Council Decision 2000/185/EC of 28 February
2000 (3).

Based on the assessment reports to be drawn up by 1 October 2002 by the Member States that have
applied such reduced rates, the Commission is required to submit a global evaluation report to the Council
and the European Parliament by 31 December 2002, accompanied if necessary by a proposal for a final
decision on the VAT rate to be applied to labour-intensive services.

This is to be done as part of the rationalisation of rules and derogations applicable to reduced VAT rates
announced in the Commission Communication on ‘A strategy to improve the operation of the VAT system
within the context of the internal market’ (4), which advocates considering how reduced rates of VAT can
be used in the interests of various Community policies, particularly job creation.

In view of the time needed to carry out a thorough global review of the national reports, the Commission
is presenting a proposal for an amendment of Article 28(6) of the 6th VAT Directive extending the period
of application of reduced VAT rates on labour-intensive services by one year.

Council Decision 2000/185/EC authorising the nine Member States to apply a reduced rate of VAT to
certain labour-intensive services must, therefore, also be amended in the same way to allow those Member
States to continue applying the reduced rates for another year under the same conditions, without altering
or extending the scope of the experiment.

(1) OJ L 277, 28.10.1999, p. 34.
(2) OJ L 145, 13.6.1977, p. 1. (Directive last amended by Directive 2002/38/EC: OJ L 128, 15.5.2002, p. 41).
(3) OJ L 59, 4.3.2000, p. 10.
(4) COM(2000) 348 final, 7.6.2000.

28.1.2003

EN

Official Journal of the European Communities

C 20 E/215

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to the Sixth Council Directive (77/388/EEC) of
17 May 1977 on the harmonisation of the laws of the Member
States
taxes — common system of
value-added tax: uniform basis of assessment (1), and in
particular Article 28(6) thereof,

relating to turnover

needed to produce a thorough global evaluation of the
national reports, the maximum period of application set
for
in Directive 77/388/EEC has been
extended.

this measure

(4) The period of application of Decision 2000/185/EC should

also be extended,

HAS ADOPTED THIS DECISION:

Having regard to the proposal from the Commission,

Article 1

Whereas:

Decision 2000/185/EC is amended as follows:

1. In the first paragraph of Article 1 ‘three years running from
1 January 2000 to 31 December 2002’ is replaced by ‘four
years running from 1 January 2000 to 31 December 2003’.

2. In the second paragraph of Article 3, ‘31 December 2002’ is

replaced by ‘31 December 2003’.

Article 2

the Kingdom of Spain,

This Decision is addressed to the Kingdom of Belgium, the
French
Hellenic Republic,
Republic,
of
Luxembourg, the Kingdom of the Netherlands, the Portuguese
Republic and the United Kingdom of Great Britain and
Northern Ireland.

the Grand Duchy

Italian Republic,

the

the

(1) Under Council Decision 2000/185/EC (2), Belgium, Greece,
Spain, France, Italy, Luxembourg, the Netherlands, Portugal
and the United Kingdom are authorised to apply, up to
31 December 2002, a reduced rate of VAT on the labour-
intensive services for which they submitted an application.

(2) Based on the reports to be drawn up by 1 October 2002
by the Member States that have applied such reduced rates,
the Commission is required to submit a global evaluation
report
to the Council and the European Parliament by
31 December 2002, accompanied if necessary by a
proposal
for a final decision on the VAT rate to be
applied to labour-intensive services.

(3) Since the Member States have not yet submitted any
assessments to the Commission and in view of the time

(1) OJ L 145, 13.6.1977, p. 1. Directive last amended by Directive

[. . .].

(2) OJ L 59, 4.3.2000, p. 10.