WRITTEN QUESTION E-3841/02 by Walter Veltroni (PSE) to the Commission. VAT on compact discs.
Date: 2003-01-09
Institutions: European Parliament, Provisional data
Subjects: Internet, VAT rate, audiovisual piracy, consumer price, copyright, cultural object, fraud, prices, record, tax system

10.7.2003

EN

Official Journal of the European Union

C 161 E/153

Answer given by Mrs Wallström on behalf of the Commission

(6 February 2003)

The Honourable Member has expressed his concern regarding the system and the criteria that the
Commission uses for special protection area (SPA) designation.

According to provisions of Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild
birds (1) a site is classified as a special protection area for conservation of the birds, SPA, by Member States
and not by the Commission.

The Birds Directive states that Member States shall classify in particular the most suitable territories in
number and size as special protected areas for the conservation of birds, taking into account their
protection requirements in the geographical sea and land area where the Directive applies.

In relation to the criteria for classifying an area as a SPA, the Birds Directive does not specify very detailed
criteria for the identification of the sites. The approach for SPAs cannot therefore be the same as for the
Habitats Directive (2) where the text has included a detailed list of eligibility criteria. Nevertheless, the Birds
Directive states the obligation to choose the most suitable areas. Similar measures must be taken for
regularly migratory species not listed in Annex I of the Birds Directive. Finally Member States shall pay
particular attention to the protection of wetlands and particularly to wetlands of international importance.

(1) OJ L 103, 25.4.1979.
(2) 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 161 E/158)

WRITTEN QUESTION E-3841/02

by Walter Veltroni (PSE) to the Commission

(9 January 2003)

Subject: VAT on compact discs

The market in audiovisual and multi-media products has always been subject to a high rate of taxation.

This sets off a chain reaction which, because of high prices, discourages people from buying recordings,
especially of music. The low demand affects royalties, discourages creativity and has a negative impact on
the potential of a market which would otherwise be much more vibrant and profitable, since the number
of copies sold would increase.

This situation induces many potential purchasers to buy goods obtained by unlawful means.

The market in pirate discs and the availability of music via the Internet, made possible by ‘peer-to-peer’
systems, further discourage sales by offering an alternative product, often of adequate quality, to most
potential purchasers of music CD’s. In addition, illicit and alternative markets are flourishing, often using
sales networks operated by illegal immigrants.

In view of the frequent requests it receives to apply a lower rate of taxation to multi-media such a CD’s,
CD-ROMs and DVD’s and to activities in the cultural and audiovisual sphere in the broad sense, does the
Commission intend, in the context of the forthcoming revision of Directive 77/388/EEC (1) on VAT, to
commit itself to proposing a change in the provisions of the Directive with a view to decisively lowering
the rate of taxation on cultural goods and services and including CD’s in Annex H (which already covers
other ‘cultural products’ such as books), in order to promote the full enjoyment of ‘means of disseminating
culture’ throughout Europe and discourage the unlawful parallel market?

(1) OJ L 145, 13.6.1977, p. 1.

C 161 E/154

Official Journal of the European Union

EN

10.7.2003

Answer given by Mr Bolkestein on behalf of the Commission

(28 February 2003)

The Sixth VAT Directive (1) currently stipulates that only the standard rate may be charged on compact
discs in all Member States. This already ensures a degree of harmonisation in practice of the taxation of
CDs throughout the Community (in fact the standard rate varies between Member States from 15 % to
25 %). However, the lower rates are optional for Member States and introducing this option on CDs would
only accentuate the differences between the rates applied in the Community.

Lowering the rate of VAT is often cited as a way of tackling the serious problems confronting the music
industry, caused mainly by piracy and the growth of
illicit and alternative markets, a worsening
phenomenon throughout the world in recent years.

Nevertheless, it should be borne in mind that lowering the rate of VAT may not be sufficient to combat
organised piracy effectively at the international level.

In many cases a reduction in the rate of VAT is not fully passed on in the final price to the consumer.
Even when it is passed on, the effect is normally only transitory and disappears in time. And even if the
reduction were passed on completely, the price would still be higher than the black market price.

On the specific question of computer piracy by downloading from the Internet, lowering the rate of VAT
is unlikely to prevent consumers from continuing the practice. The equipment required for copying is sold
freely and only a truly deterrent measure would be capable of changing habits. The application of taxes
specifically for this purpose on the equipment and the blank CDs, as some countries already do on audio
cassettes, would probably have a more beneficial effect and help not only offset the loss of royalties but
also penalise the counterfeiters.

As regards the Commission’s intentions, they have not yet been finally decided. Once the evaluation report
on the experimental reduction of the rate on labour-intensive services has been finalised, the Commission
will present an overall report and a proposal for a directive on the field of application of reduced rates at
the end of the first half of 2003.

(1) Sixth Council Directive 77/388/EEC of 17 May 1977, as last amended by Council Directive 2002/93/EC of
3 December 2002, to extend the facility allowing Member States to apply reduced rates of VAT to certain labour-
intensive services, OJ L 331, 7.12.2002.

(2003/C 161 E/159)

WRITTEN QUESTION E-3842/02

by Paolo Pastorelli (PPE-DE) to the Commission

(9 January 2003)

Subject: The province of Novara

Following the creation of the province of Verbano-Cusio-Ossola (VCO) the province of Novara is now the
only one in Piedmont which does not receive assistance from the Structural Funds granted by the
European Union in accordance with Regulation (EEC) 2081/93 (1), but its exclusion does not automatically
mean that the new province of Novara does not come within the scope of the parameters laid down for
Objective 2 of the Funds, which constitute the main instrument of economic and social cohesion and an
expression of intra-Community solidarity.

The subsidies which the European Union allocates to the industrial sectors in the regions covered by
Objective 2 are precisely designed to slow down, arrest and reverse processes of industrial decline in
regions which have undergone considerable development of the secondary sector. In view of all this, does
the Commission intend to check the data and parameters in its possession in order to ascertain the
possibility of including the province of Novara among the Objective 2 regions?

(1) OJ L 193, 31.7.1993, p. 5.