WRITTEN QUESTION P-0028/03 by Bart Staes (Verts/ALE) to the Commission. Compatibility of US cross-border lease (CBL) systems with Community competition law and public procurement legislation.
Date: 2003-01-14
Institutions: European Parliament, Provisional data
Subjects: EU law, United States, competition law, hire purchase, public contract, tax system

C 58 E/10

Official Journal of the European Union

EN

6.3.2004

Answer given by Mrs Diamantopoulou on behalf of the Commission

(4 February 2003)

As the conditions which journalists must fulfil in order to take up salaried employment in Italy are not
clear, the Commission will contact the Italian authorities to verify the conditions of application of this
legislation and will inform the Honourable Member of the outcome.

(2004/C 58 E/010)

WRITTEN QUESTION E-3749/02

by Glenys Kinnock (PSE) to the Commission

(20 December 2002)

Subject: Financing for development

Would the Commission outline how much progress has been made in efforts to ensure that Member States
meet the funding for development targets agreed at the Barcelona Summit in March?

Is the Commission satisfied with the progress so far, and would the Commission confirm that the mandate
to monitor the process is being fulfilled?

Answer given by Mr Nielson on behalf of the Commission

(13 February 2003)

Since the Monterrey Conference (18 to 22 March 2002), several Member States including Belgium, Ireland,
Luxembourg, the Netherlands, Finland and Sweden reaffirmed their commitment to meet or exceed the
United Nations Official Development Assistance (UN ODA) target of 0,7 %. Others have set intermediate
targets higher than the Community benchmark. The United Kingdom announced an increase of around
USD 2,2 billion in its annual ODA budget by 2005, raising the gross national product (GNP) ratio from
0,32 % to 0,4 %. France has committed itself to reach the United Nations target by 2012 which means that
its contribution in 2006 will be above the set Union average. The Commission considers that first steps
have been taken.

On 19 November 2002,
the
implementation of those commitments. In this respect, it welcomed the intention of the Commission to
ensure the monitoring, in particular concerning the financial commitments.

stressed the importance of adequate monitoring of

the Council

The Commission will continue the work done in preparation of the Monterrey Conference through a
factual reporting on the state of play at European level to be presented to the Council in May 2003.
A questionnaire was sent to the Member States in December 2002 and bilateral contacts will continue on
all of the eight commitments made during the Barcelona European Council (15/16 March 2002).

(2004/C 58 E/011)

WRITTEN QUESTION P-0028/03

by Bart Staes (Verts/ALE) to the Commission

(14 January 2003)

Subject: Compatibility of US cross-border lease (CBL) systems with Community competition law and public

procurement legislation

For some time, American investors have been proposing to Flemish communes that they should lease their
sewerage networks (or parts of them) for a period of 99 years. The American investor immediately
subleases them back to the commune for a shorter period, 25 years. At the end of this period the
commune has a right of purchase or call option pertaining to the remaining 99 minus 25 years. This

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Official Journal of the European Union

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financial arrangement is called ‘leasehold’ or ‘lease and leaseback’. The aim is to bring about a win-win
situation, in that the communes generate extra income while the private investor, in accordance with the
tax regime which applies to him, gains a tax advantage from the agreement by placing the sewerage
system on his balance sheet and then writing it off. The transactions in Flanders are offered by a particular
firm which cooperates with a bank which enjoys a privileged relationship with communes and towns in
Flanders.

Is the Commission aware of these facts, and does it consider these arrangements ethical? Are they not at
variance with an ethically correct approach to taxation, under which the authorities may be expected not
to take advantage of arrangements which are entered into with the sole aim of sharing in a tax advantage
via banks in Member States or third countries?

Are these transactions subject to European competition law? Does the method described here violate
European competition law? Are those who perform such transactions liable to VAT and/or to an advance
levy of the kind applicable to income derived from securities?

Does European public procurement legislation apply to these transactions and do the current practices in
Flanders violate it or do they not?

Answer given by Mr Bolkestein on behalf of the Commission

(6 February 2003)

to a large extent under the Member States competence, unless it

The construction of lease and leaseback is known to the Commission. However, the Commission would
like to point out that, as far as direct taxes (such as the ‘précompte immobilier’) are concerned, they still
fall
they breach
fundamental rules of the EC Treaty or relevant Community secondary legislation. Therefore, as far as direct
taxation is concerned,
in this case Belgium) to
it is in principle for the Member State concerned (i.e.
internally decide how to regulate situations such as the one described by the Honourable Member.

is proved that

However, as far as the area of indirect taxation is concerned, the Commission has examined this case in
the light of the applicable Community legislation, i.e. the Sixth VAT Directive (1). Indeed, on the basis of
the facts given, it appears that, for VAT purposes the transaction in question should be considered to be
the leasing of immovable property, for which normal VAT rules for leasing apply. Since the applicable
legislation leaves the Member State free to choose between two options, it appears the supply will either be
exempt under Article 13(B)(b) of the Sixth VAT Directive or taxable if and insofar the Member State
concerned uses the option to tax the leasing of immovable property under Article 13(C)(a).

The facts, as stated by the Honourable Member, would not appear to disclose any infringement of
Community competition law.

The field of application of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of
procedures for the award of public service contracts (2) excludes contracts for the acquisition or rental, by
whatever financial means, of land, existing buildings, or other immovable property or concerning rights
thereon. Nevertheless, financial service contracts concluded at the same time as, before or after the contract
of acquisition or rental, in whatever form, are subject to the Directive. Since the communes concerned are
calling on a third party to provide financial services in relation to the leases in question, compliance with
the provisions of Directive 92/50/EEC is therefore required. Without concrete details of any financial
service contracts concluded by the communes concerned in this connection, the Commission is unable to
comment on their conformity with Community public procurement legislation.

(1) Sixth Council Directive 77/388/EE of 17 May 1977 on the harmonisation of the laws of the Member States relating
to turnover taxes (cid:1) Common system of value added tax: uniform basis of assessment, OJ L 145, 13.6.1977.

(2) OJ L 209, 24.7.1992.