WRITTEN QUESTION P-3390/03 by Mihail Papayannakis (GUE/NGL) to the Commission. VAT on tailoring.
Date: 2003-11-10
Institutions: European Parliament, Provisional data
Subjects: VAT rate, clothing industry, tax harmonisation, tax incentive

C 78 E/536

Official Journal of the European Union

EN

27.3.2004

Answer given by Mrs de Palacio on behalf of the Commission

(12 January 2004)

On 1 October 2003, the Commission adopted a proposal to amend the guidelines for the development of
the trans-European transport network (TEN-T) (1). This proposal includes a list of priority projects declared
to be ‘of European interest’, which includes project No 6 (high-speed train/combined transport) Lyon-
Turin-Milan-Venice-Triest-Ljubljana-Budapest (Annex III to the proposal for a decision). This demonstrates
the Commission’s interest in this project which is of key importance for improving links between the
central part of the European Union and the new Member States.

The information supplied by the Member States on this project, which is given in Annex III, shows that
building work on most of the sections will not start before 2010-2015, i.e. well outside the criteria defined
for the Growth Initiative, which stated that the projects should begin by 2006. It was therefore not
possible to include all the projects in the quick-start programme. However, two sections have been
included as they fit in with this framework: the international section St Jean de Maurienne-Bussoleno
(Mont Cenis tunnel between France and Italy), where preparatory work is already in progress, and the
Ljubljana-Budapest section, where construction is due to start by 2005.

If it appears that other sections meet the same criteria, the programme could be extended in accordance
with the procedure laid down for its establishment.

The Commission wishes to stress that the Growth Initiative does not in any way weaken its proposal of
1 October 2003, which will be adopted by the co-legislators under the co-decision procedure.

(1) COM(2003) 564 final.

(2004/C 78 E/0558)

WRITTEN QUESTION P-3390/03

by Mihail Papayannakis (GUE/NGL) to the Commission

(10 November 2003)

Subject: VAT on tailoring

Ecofin has set the end of 2003 as the expiry date for the lower rate of 8 % VAT applying to the traditional
tailoring trade, a sector now in decline. Will the Commission say will happen after that date? Is the
Commission in favour of increasing the rate of VAT on tailoring? In any event, what measures will the
Commission take to aid and bolster this vulnerable sector?

Answer given by Mr Bolkestein on behalf of the Commission

(11 December 2003)

Council Directive 1999/85/EC of 22 October 1999 (1) enabled Member States to apply, on an experimental
basis, a reduced rate of VAT to labour-intensive services. The types of services eligible for the experiment
were listed in Annex K. The list included one category that clearly applied to tailoring, though only to
small repairs to clothing and household linen (including alterations as well as repairs). The experiment was
extended for a year to provide the people offering the services in question with legal security and
continuity while the Commission prepared a comprehensive evaluation report on the experiment.

The Commission adopted its report on 2 June 2003 (2). It concluded that ‘taking into account both
information supplied by Member States and the inherent limitation of the analytical methods applied, it
was not possible to find solid evidence of [VAT] reductions boosting job creation. For the effect on the
reduction on black economy [SIC] the same observation can be made.’

27.3.2004

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Official Journal of the European Union

C 78 E/537

the Commission also used its QUEST macro-economic model

to carry out a
For the evaluation,
comparative analysis of the effects of reduced VAT rates and reduced labour charges. The analysis showed
that, even if a reduction in VAT is passed on in full in domestic prices, for the same budgetary cost a
reduction in labour charges creates 52 % more jobs.

As promised in its Communication on the VAT strategy adopted in 2000 (3), the Commission adopted, on
23 July 2003, a proposal for a Directive to review and rationalise the rules and derogations concerning
reduced VAT rates (4). Its main objective was to improve the internal market by simplification and more
uniform application of VAT. It was also important to offer all Member States the same opportunities to
apply reduced rates to the same things.

In drawing up the proposal, the Commission took account of the results of the experiment but also the
VAT treatment of the services in question in the Member States. At present, four Member States (Belgium,
Greece, Luxembourg and the Netherlands) apply a reduced rate to these services on an experimental basis
and one (Ireland) applies a parking rate under a temporary derogation. Therefore these services were not
included during the rationalisation exercise.

The proposal is now being examined by the Council, which will have to decide, unanimously and in the
light of Parliament’s opinion, on the future scope of reduced VAT rates.

At present, there are no plans to introduce any other Community tax measures for tailoring.

(1) Council Directive 1999/85/EC of 22 October 1999, amending Directive 77/388/EEC as regards the possibility of

applying on an experimental basis a reduced VAT rate on labour-intensive services, OJ L 277, 28.10.1999.

(2) COM(2003) 309 final.
(3) COM(2000) 348 final.
(4) COM(2003) 397 final.

(2004/C 78 E/0559)

WRITTEN QUESTION E-3393/03

by Jean Lambert (Verts/ALE) to the Commission

(17 November 2003)

Subject: Moped type-approval

In the European Directive on type-approval 2002/24/EC (1), a clear distinction is made between ordinary
mopeds and low-performance mopeds. The note on Annex 1 states that ‘separate Directives will lay down
specific requirements for low-performance mopeds, i.e. mopeds with pedals, with an auxiliary engine of
power not exceeding 1 kW and a maximum design speed not exceeding 25 km/h’. Nevertheless, the UK
Government has not made any concessions for motorised bicycles, and, in the UK, DVLA registration, tax,
MOT, third-party insurance, road tax and the wearing of a crash helmet are obligatory. In Germany, this is
not the case: none of these are required.

Does the Commission take the view that the UK is acting illegally by not distinguishing between ordinary
mopeds and low-performance mopeds?

(1) OJ L 124, 9.5.2002, p. 1.