WRITTEN QUESTION E-2476/03 by Juan Naranjo Escobar (PPE-DE) to the Commission. Reduced VAT for hotels, restaurants and cafés in the European Union.
Date: 2003-07-24
Institutions: European Parliament, Provisional data
Subjects: VAT rate, catering industry, hotel industry, restriction on competition, tax harmonisation, tax system

C 88 E/412

Official Journal of the European Union

EN

8.4.2004

However, Community law in relation to animal welfare is limited in scope and covers essentially only the
rearing of animals on farms and the slaughter or killing of those animals, transport of all species and the
treatment of laboratory animals.

Prevention of cruelty to domestic cats for example, falls within the exclusive competence of the Member
States and it is therefore, for the Italian authorities to investigate the allegations referred to by the
Honourable Member.

(2004/C 88 E/0418)

WRITTEN QUESTION E-2476/03

by Juan Naranjo Escobar (PPE-DE) to the Commission

(24 July 2003)

Subject: Reduced VAT for hotels, restaurants and cafés in the European Union

At present, hotel and catering services are included in Annex H to the Sixth VAT Directive.

On the basis of that Directive, 12 of the 15 Member States have decided to apply a VAT rate below 15 %
for this category of services, but it is clear that the disparity in the rates applicable in the various countries
is leading to unequal treatment which may distort competition in the industry, which is highly sensitive to
any kind of tax-related question.

Will the Commission take action, on the basis of its power of initiative, with a view to suggesting to the
Member States that they take account of the accumulation of circumstances which affect the hotel sector
so that the VAT rate applicable to the sector is as low as possible?

Answer given by Mr Bolkestein on behalf of the Commission

(5 September 2003)

In its 2000 communication the Commission set out a strategy to improve the operation of the value-added
tax (VAT) system in the context of the internal market (1).

No changes in the level of VAT rates are envisaged during the implementation of this strategy. Mindful of
the principle of subsidiarity, the Commission does not wish to interfere with the Member States’ fiscal
competence any more than is necessary for the smooth operation of the internal market, especially as
regards the VAT rates the Member States wish to set.

However, it is the role of the Commission to propose to the Council any rules necessary for the smoother
operation of the internal market. The Commission has therefore chosen to focus on the disparities in
present system of rates with a view to making an important step in this direction. More equal treatment
must be ensured in all the Member States, including the new members, and a stop put to the distortions
created by the fact that some may apply reduced rates for certain sectors that are elsewhere prohibited.

Accordingly, on 23 July 2003 the Commission adopted a proposal for a Directive on reduced rates (2).
Catering services have now been added to hotel services on the new list of goods and services eligible for
the reduced rate. In any event, the reduced rates remain entirely optional and it is therefore up to the
Member States to decide on the sectors where they wish to apply reduced rates.

The Council now has to decide unanimously on the future scope of reduced VAT rates.

(1) COM(2000) 348 final.
(2) COM(2003) 397 final.