Opinion of the European Economic and Social Committee on the Proposal for a Council Directive amending Directive 2006/112/EEC with regard to certain temporary provisions concerning rates of value added tax COM(2007) 381 final — SEC(2007) 910
Date: 2007-10-24
Institutions: European Economic and Social Committee
Subjects: EU Member State, VAT, VAT rate, derogation from EU law, fiscal policy, tax harmonisation

C 44/120

EN

Official Journal of the European Union

16.2.2008

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Directive
amending Directive 2006/112/EEC with regard to certain temporary provisions concerning rates of
value added tax’

COM(2007) 381 final — SEC(2007) 910

(2008/C 44/26)

On 27 July 2007 the Council decided to consult the European Economic and Social Committee, under
Article 95 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 8 October 2007. The rapporteur
was Mr Burani.

At its 439th plenary session, held on 24-25 October 2007 (meeting of 24 October), the European
Economic and Social Committee adopted the following opinion by 154 votes, nem. con., with four absten-
tions.

Conclusions and recommendations

Reasons

1. Gist of the proposal

1.1
The Commission has launched a broad debate on the use
of reduced VAT rates, starting by publishing a Communication
to the Council and the European Parliament (1). The main aim
of this exercise is to pave the way for a new directive seeking
sustainable, durable global solutions regarding reduced rates.
‘Reduced rates’ are rates below the customary VAT rate (15 %).

1.2
In the Communication published on the same day as the
proposal, the Commission states that ‘Considerable time will be
needed in order to identify the suitable way forward’. Mean-
while, the issue arises of temporary derogations granted to
the Member States which have recently joined the EU.
These derogations expire at various different points between
June 2007 and 1 January 2010 (Articles 123-130 of the VAT
Directive) (2). The simplest solution, adopted in the Commission
proposal, is to propose that they be extended until the end of
2010, although the extension would not be general but limited
to certain goods or services. Thus, the end of these deroga-
tions would fall together with the expiry of the minimum of
15 % for the standard rate and the end of the experiment on
the application of reduced VAT rates to certain labour-intensive
services.

will in all probability continue to apply to all the countries after
new rules have been drawn up as well. Derogations which
conflict with the smooth functioning of the internal market are
not extended (agricultural inputs).

1.4
Coal and energy for heating, in particular, are excluded
from the extension. The exceptions laid down in the various
Acts of Accession are coming to an end (in 2007 or 2008) and
no extensions are provided for. Moreover, taxation on energy
sources is a separate issue which is currently being discussed;
when solutions are found, they should apply across the board.

2. General comments

2.1
Directive 2006/112/EC laid down for Member States
which joined the EU before 2001 a series of derogations (3).
These derogations are open-ended or,
to be more specific,
apply until the entry into force of the ‘“definitive system” for
intra-Community transactions’. As things stand, on the basis of
experience, a definitive system is not likely to be introduced in
the short or medium terms. The exemptions granted to the
‘old’ Member States could thus be extended almost indefi-
nitely, while the ‘new’ Member States would be penalised by the
expiry of the terms negotiated when the Acts of Accession were
adopted. Moreover, some Member States are allowed to apply
reduced rates to locally supplied services (4) until the end of
2010, while this opportunity does not exist for the others. This
situation is untenable.

1.3
The extension is granted for labour-intensive services
(housing sector, restaurants etc.) and, where some countries are
concerned, for goods which are of particular social impor-
tance (food, specialist periodicals and books, pharmaceutical
products etc.). The reason for this is that the reduced VAT rate

2.2
The proposal is a transitional solution which will enable
the Member States which have recently joined the EU to
operate on an essentially level playing field with the other

(1) COM(2007) 380 final of 5.7.2007.
(2) Council Directive 2006/112/EC of 28.11.2006.

(3) Articles 109 to 122 of the VAT directive.
(4) See Annex IV to the VAT directive.

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Official Journal of the European Union

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Member States, at least until 31 December 2010. The Commis-
sion hopes that, by that date, the Council will have adopted the
new directive bringing order to all exemptions across the
board, as called for in the Communication.

3. Specif ic comments

3.1
The EESC congratulates the Commission on its work:
both the proposal for a directive, which it endorses unre-
servedly, and the publication of a Communication announcing
the definition of an ‘exemption’ structure which is consistent
with the principles of the single market and the Lisbon Strategy.

Brussels, 24 October 2007.

The EESC will issue a specific opinion on the Communication,
to make a constructive contribution to the debate.

that

Previous experience would suggest

the general
3.2
interest of reaching swift consensus on the proposal might take
second place to defending particular interests and policies: the
EESC hopes that this fear will prove unfounded. In terms of
technical accuracy the proposal cannot be criticised: as the deci-
sion-making process progresses, only the political aspects will
play a role. The EESC draws the decision-makers' attention to
the needs of the market and the public, which require trans-
parent, fair laws to be adopted without delay.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on Croatia on the road to accession

(2008/C 44/27)

On 16 February 2007 the European Economic and Social Committee, acting under Rule 29(2) of its Rules
of Procedure, decided to draw up an own-initiative opinion on: Croatia on the road to accession.

The Section for External Relations, which was responsible for preparing the Committee's work on the
subject, adopted its opinion on 3 October 2007. The rapporteur was Ms Anne-Marie Sigmund.

At its 439th plenary session, held on 24 and 25 October 2007 (meeting of 24 October 2007), the European
Economic and Social Committee adopted the following opinion by 155 votes to two with four abstentions.

1. Introduction

1.1
On 20 April 2004, the Commission issued a positive
opinion on Croatia's application for accession to the European
Union; on 20 December 2004, the European Council decided to
open accession negotiations in March 2005, which were then
postponed to October 2005.

1.2
The joint screening process was successfully completed
in October 2006, and bilateral accession negotiations were able
to begin. Substantial progress has been made on the political
and economic criteria and on transposing the acquis.

1.3
The Committee welcomes the speedy progress of the
negotiations and the broad-based participation of Croatian civil

society in this process but stresses that the contribution of all
society organisations concerned is
the representative civil
needed, and in particular the comprehensive involvement of the
social partners in the negotiation of all the relevant chapters. In
this context, the Committee refers to its opinion of 31 March
forward in point 5.5, which
2004 and the arguments put
continue to be valid and which it now reiterates (1).

1.4
This opinion will refrain from making another analysis
of existing statistical material, but will instead concentrate on
assessing the situation of organised civil society in Croatia, asses-
sing its foundations, opportunities and challenges.

(1) EESC opinion of 31.3.2004 on Croatia's Application for EU membership
(rapporteur Mr Strasser), point 5.5: ‘If the Croatian economy is to success-
fully cope with the conditions applying in the EU's internal market, it is essen-
tial that the necessary reforms, liberalisation measures and adjustments to
comply with EU law receive the support of civil society. Key prerequisites in this
context are that the Croatian population is kept adequately informed of the
importance and the impact of Croatia's integration into the EU and that repre-
sentative civil society organisations are involved in the political decision-making
processes.’ (OJ C 112, 30.4.2004, p.68).