WRITTEN QUESTION E-3176/02 by Charles Tannock (PPE-DE) to the Commission. Debt and the Growth and Stability Pact.
Date: 2002-11-07
Institutions: European Parliament, Provisional data
Subjects: convergence criteria, multilateral surveillance, public debt, stability pact, stability programme

14.8.2003

EN

Official Journal of the European Union

C 192 E/101

(2003/C 192 E/098)

WRITTEN QUESTION P-3171/02

by Werner Langen (PPE-DE) to the Commission

(30 October 2002)

Subject: VAT exemption for private management companies in Germany

for

the German Army. The Army provides manpower

Private management companies have been established in the military sector in the Federal Republic of
Germany to provide services
for GEBE
(Development, Procurement and Operations Company) and other companies involved in fleet manage-
ment, clothing management and land valuation. The companies pay the wages of such personnel who may
be employed, for example, as drivers in a fleet management company. Such private companies are
exempted from VAT in respect of the wages component of the services that they provide. Without such
exemption, the German Army would have to pay VAT in respect of the driving services and wages
invoiced by the private companies. The Sixth VAT Directive established a uniform basis of assessment in
the EU and largely harmonised the scope of VAT. Pursuant to that Directive, the Member States may not,
of
the management
companies acting for the German Army do not involve the manufacture of or trade in armaments, they
cannot be excluded from the scope of the EC Treaty.

their own account, create new exemption categories. Since the operations of

Is such VAT exemption compatible with the Sixth VAT Directive?

If not, what will the Commission do to put an end to this breach of European Union law?

Answer given by Mr Bolkestein on behalf of the Commission

(4 December 2002)

According to the question, private management companies, working with manpower provided by the
German Army, are not charging VAT on the ‘labour costs’ component of their services to the Army. The
services in question do not involve the manufacture of or trade in armaments. The Honourable Member
wonders whether it contravenes the 6th VAT Directive (1) not to charge VAT on labour costs as the
German Army should normally pay VAT on services and salaries for which it is invoiced by private
companies.

The question would appear to relate to operations other than intra-Community imports and acquisitions
on which the armed forces may claim exemption under Articles 14(1)(g) and 28c(B)(b) of the 6th VAT
Directive.

Under Article 11 of the 6th VAT Directive, taxable companies are required to charge VAT on ‘everything
which constitutes the consideration which has been or is to be obtained’
in respect of the taxable
transactions which they carry out. As labour costs are included in the price invoiced, VAT must be
charged on that component too.

The Commission intends to contact the German authorities about this matter.

(1) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States

relating to turn-over taxes (cid:1) common system of value added tax (cid:1) OJ L 145, 13.6.1977.

(2003/C 192 E/099)

WRITTEN QUESTION E-3176/02

by Charles Tannock (PPE-DE) to the Commission

(7 November 2002)

Subject: Debt and the Growth and Stability Pact

In his extremely helpful answer to Written Question E-1621/02 (1), Commissioner Solbes Mira confirmed
the Commission’s willingness to take into account ‘the relevant cyclical and structural characteristics of the
economy of each Member State’ when assessing compliance with the Growth and Stability Pact.

C 192 E/102

Official Journal of the European Union

EN

14.8.2003

The Commissioner also indicated that the Commission takes into account the overall level of debt built-up
by a particular Member State, but only to the extent that it regards adherence to a close-to-balance or in
surplus objective for the budget deficit as ‘sufficient to ensure a continuous reduction of the overall debt
level.’ The Pact remains focused on meeting the two major objectives of a budget deficit of less than 3 % of
GDP in any one year and an overall budgetary balance over the economic cycle.

Does the Commission not believe that greater attention needs to be paid to overall levels of debt, especially
in the case of highly-indebted countries, and that this is necessary because of the widespread fudging of the
Maastricht debt criteria, something which was not anticipated when the Growth and Stability Pact was first
designed?

(1) See page 8.

Answer given by Mr Solbes Mira on behalf of the Commission

(4 December 2002)

Member States have an EC Treaty obligation to maintain debt levels below 60 % of the gross domestic
product (GDP), or if above to ensure that it diminishes at a satisfactory pace towards the reference value.
The Commission has an EC Treaty obligation to monitor compliance with this requirement and to prepare
a report under Article 104(3) of the EC Treaty (cid:1) the excessive deficit procedure (cid:1) in the event of non
compliance.

However, the requirement for debt to be ‘… sufficiently diminishing and approaching the reference value
at a satisfactory pace’
(Article 104(2) of the EC Treaty) has not been explicitly defined in secondary
legislation.

However, it is the intention of the Commission to clarify the debt requirement in order to operationalise
the debt criteria already included in the EC Treaty. Particular attention would be devoted to the dynamic of
different components of debt (stock-flow adjustment, primary surplus, interest rate-growth differential) and
the expected impact of ageing on public finances. In order to better assess the long-term sustainability of
public finances, it is also important that Member States provide the necessary information in their Stability
and Convergence Programmes.

(2003/C 192 E/100)

WRITTEN QUESTION P-3185/02

by Alejo Vidal-Quadras Roca (PPE-DE) to the Commission

(31 October 2002)

Subject: Autonomous Community taxes on premises occupied by large commercial companies

In its pre-accession negotiations with the countries of Eastern Europe, the Commission is demanding that
governments abolish or amend retail trade regulations which restrict freedom of competition or affect the
principle of freedom of establishment.

Regulations of this type, however, are to be found in the national legislation of existing EU Member States,
(cid:1) for example, Spain, and specifically the Catalan Autonomous Community, where an Autonomous
Community law (Law 16/2000) has been adopted, providing for taxes on premises occupied by large
commercial establishments; the revenue thus raised is to be channelled into aid to small traders operating
in the Catalan Autonomous Community. This means that the aid received by small traders is to be funded
by their competitors.

The adoption of this measure comes on top of Catalonia’s existing measures restricting the opening of
large commercial establishments, in the wake of Law 17/2000 on commercial facilities.

Is the Commission aware of the inconsistency of allowing legislation of this kind to survive within the EU
and simultaneously demanding that the candidate countries abolish it?