Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Directive amending Directive 77/388/EC by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia’(COM(2004) 295 final)
Date: 2004-10-27
Institutions: European Economic and Social Committee
Subjects: ESC opinion, accession to the European Union, basis of tax assessment, provision of services, tax exemption

C 120/114

EN

Official Journal of the European Union

20.5.2005

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Directive
amending Directive 77/388/EC by reason of the accession of the Czech Republic, Estonia, Cyprus,
Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia’

(COM(2004) 295 final)

(2005/C 120/20)

On 30 June 2004 the Council decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

In view of the urgency of the work, the European Economic and Social Committee decided at its 412th
plenary session of 27 and 28 October 2004 to appoint Mr Pezzini as rapporteur-general and adopted the
following opinion by 121 votes for, none against and three abstentions.

1. Introduction

2. General comments

1.1
As part of the ‘Vienna Strategy for Europe’, the Vienna
European Council of 11 and 12 December 1998 recommended
that Member States which so wished should be allowed on an
experimental basis to apply a reduced VAT rate to labour-inten-
sive services so as to test the impact of such reductions on job
creation and action to curb the underground economy (1).

1.2
Following the recommendation, the Council adopted an
ad hoc Directive (1999/85/EC) on 22 October 1999, to be
valid for the four-year period 2000-2003. Nine Member States
— Belgium, Greece, Spain, France, Italy, Luxemburg, the Neth-
erlands, Portugal and the United Kingdom — made use of the
possibility.

the
In response to reports evaluating the impact of
1.3
measures, the Commission presented a proposal for a directive
for simplifying and rationalising the reduced VAT rates (2).
Because of numerous divergences, the Council has not yet been
able to adopt the draft directive. In this area, unfortunately,
adoption still requires unanimity.

1.4
Consequently, and given the risk of legal uncertainty in
the Member States applying the reduced rates, the Commission,
in agreement with the Council, has proposed extending the
validity of Directive 1999/85/EC until 31 December 2005.

Brussels, 28 October 2004.

2.1
The EESC has on several previous occasions endorsed
the principle of allowing reduced VAT rates to be applied to
labour-intensive services (3).

In its opinions, the EESC has taken a positive view of
2.2
these measures' impact in terms of creating jobs and curbing
undeclared work.

2.3
The EESC has also made many suggestions for extending
the VAT reductions to other sectors such as restaurant services
or restoration of historic and religious buildings and buildings
of private cultural and architectural heritage.

2.4
The EESC therefore endorses the principle of allowing
those new Member States who so request to apply the reduced
rate of VAT to labour-intensive services, under Directive 1999/
85/EC, until 31 December 2005.

The EESC nonetheless regrets that

2.5
the Council was
unable to agree on the European Commission's proposal for a
directive to simplify and rationalise the system.

2.6
The EESC has repeatedly stated its conviction that unani-
mity in many aspects of tax affairs is a real obstacle to the
Union's progress.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

(1) Unemployment in the EU at the time was close to 10 %. The extra-
ordinary Luxemburg European Council
(1997) had focused on
unemployment. Research by the European Academy of Avignon
had revealed levels of undeclared work in the EU of up to 28 %. See
also the EESC opinion on undeclared work (OJ C 101 of 12.4.1999,
p. 30)

(2) COM(2003) 397 final of 23 July 2003

(3) OJ C 209 of 22.7.1999
OJ C 32 of 5.2.2004