European Parliament legislative resolution of 3 October 2018 on the proposal for a Council directive amending Directive 2006/112/EC as regards rates of value added tax (COM(2018)0020 – C8-0023/2018 – 2018/0005(CNS))
Date: 2018-10-03
Institutions: Committee on Economic and Monetary Affairs, Committee on Legal Affairs, European Parliament
Subjects: EU Member State, VAT, goods and services, provision of services, tax collection, tax harmonisation, tax relief




C_2020011EN.01021101.xml










13.1.2020   


EN


Official Journal of the European Union


C 11/211






P8_TA(2018)0371
Rates of value added tax*
European Parliament legislative resolution of 3 October 2018 on the proposal for a Council directive amending Directive 2006/112/EC as regards rates of value added tax (COM(2018)0020 – C8-0023/2018 – 2018/0005(CNS))
(Special legislative procedure – consultation)
(2020/C 011/25)

The European Parliament,







—


having regard to the Commission proposal to the Council (COM(2018)0020),










—


having regard to Article 113 of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C8-0023/2018),










—


having regard to Rule 78c of its Rules of Procedure,










—


having regard to the report of the Committee on Economic and Monetary Affairs (A8-0279/2018),












1.


Approves the Commission proposal as amended;












2.


Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union;












3.


Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;












4.


Asks the Council to consult Parliament again if it intends to substantially amend the Commission proposal;












5.


Instructs its President to forward its position to the Council, the Commission and the national parliaments.





Amendment 1


Proposal for a directive


Recital 1









Text proposed by the Commission



 



Amendment











(1)


Rules on rates of value added tax (VAT) as currently set out in Council Directive 2006/112/EC (1) aim to preserve the functioning of the internal market and avoid distortions of competition. The rules were designed over two decades ago based on the origin principle. In its VAT Action Plan (2) and in the follow-up to this (3), the Commission announced its intention to adjust those rules for a definitive VAT system for cross-border business-to-business (B2B) trade in goods between Member States that would be based on the taxation in the Member State of destination.






 








(1)


Rules on rates of value added tax (VAT) as currently set out in Council Directive 2006/112/EC (4) aim to preserve the functioning of the internal market and avoid distortions of competition. The rules were designed over two decades ago based on the origin principle and are no longer fit for purpose. In its VAT Action Plan (5) et le suivi de celui-ci and in the follow-up to this (6), the Commission announced its intention to adjust those rules for a definitive VAT system for cross-border business-to-business (B2B) trade in goods between Member States that would be based on the taxation in the Member State of destination.









 






Amendment 2


Proposal for a directive


Recital 2









Text proposed by the Commission



 



Amendment











(2)


Under a definitive system where the supply of goods and services would be taxed in the Member State of destination, suppliers derive 
no significant
 benefit from being established in a lower-rate Member State. Greater diversity in VAT rates 
would not
, under such a system, 
disrupt
 the functioning of the single market 
nor create distortions of
 competition. In those circumstances, 
it would be appropriate to grant more
 flexibility 
to Member States
 in the setting of rates.






 








(2)


Under a definitive system where the supply of goods and services would be taxed in the Member State of destination, suppliers derive 
less
 benefit from being established in a lower-rate Member State. Greater diversity in VAT rates 
should
, under such a system, 
be less of a disruption to
 the functioning of the single market 
and would not distort
 competition. In those circumstances, 
it should be possible to grant Member States a certain
 flexibility in the setting of rates. 
However, Member States should not ignore the objective of ensuring greater convergence in VAT rates.











Amendment 3


Proposal for a directive


Recital 3









Text proposed by the Commission



 



Amendment











(3)


The removal of restrictions in 
parallell
 with the entry into force of the definitive arrangements for the taxation of trade between Member States should allow Member States to continue to apply reduced VAT rates 
that are currently granted as
 derogations under Chapter 4 of Title VIII of Directive 2006/112/EC and Annex X to Directive 2006/112/EC 
and
 which would otherwise expire with the entry into force of those arrangements.






 








(3)


The removal of restrictions in 
parallel
 with the entry into force of the definitive arrangements for the taxation of trade between Member States should allow Member States to continue to apply reduced VAT rates 
in place of the
 derogations 
granted
 under Chapter 4 of Title VIII of Directive 2006/112/EC and Annex X to Directive 2006/112/EC, which would otherwise expire with the entry into force of those arrangements.









Amendment 4


Proposal for a directive


Recital 4









Text proposed by the Commission



 



Amendment











(4)


In a definitive VAT system all Member States should be treated equally and should therefore have the same restrictions in applying reduced VAT rates, which should remain an exception to the standard rate. Such equal treatment 
without restricting
 Member States current flexibility in setting VAT can be achieved by enabling all of them to apply a reduced rate for which the minimum requirement does not apply, as well as an exemption with the right to deduct input VAT, in addition to a maximum of two reduced rates of a minimum of 5%.






 








(4)


In a definitive VAT system all Member States should be treated equally and should therefore have the same restrictions in applying reduced VAT rates, which should remain an exception to the standard rate, 
in order to avoid disproportionate fragmentation of the VAT system within the internal market
. 
Taking into account the general interest such as positive cultural, social or environmental effects of different services and goods and without restricting
 Member States
’
 current flexibility in setting VAT rates, such equal treatment can be achieved by enabling all of them to apply a reduced rate for which the minimum requirement does not apply, as well as an exemption with the right to deduct input VAT, in addition to a maximum of two reduced rates of a minimum of 5%. 
Within the limits provided for by this Directive, it should be possible for Member States to maintain existing or introduce new reduced VAT rates. This Directive will increase subsidiarity in the VAT system, making it possible for Member States to accommodate local conditions, preferences and traditions or choose a simple and uniform tax rate. However, Member States should avoid using reduced VAT rates for harmful or luxury products.











Amendment 5


Proposal for a directive


Recital 4 a (new)









Text proposed by the Commission



 



Amendment





 


 










(4a)






In line with the Commission's Digital Single Market Strategy

 (7)

and in order to keep abreast of technological progress in a digital economy, to stimulate innovation, creation, investment and the production of new content, and to facilitate digital learning, knowledge transfer and the access to, and promotion of, culture in the digital environment, it should be possible for Member States to align the VAT rates for electronically supplied publications with lower VAT rates for publications on a physical support
.








 


 






Amendment 6


Proposal for a directive


Recital 4 b (new)









Text proposed by the Commission



 



Amendment





 


 










(4b)






Allowing Member States to apply reduced rates, including reduced rates without a minimum threshold, to printed publications and electronic publications should ensure the transfer of economic benefits to consumers, thereby promoting reading, and to publishers, thereby encouraging investment in new content and, in the case of newspapers and magazines, should reduce reliance on advertising.











Amendment 7


Proposal for a directive


Recital 4 c (new)









Text proposed by the Commission



 



Amendment





 


 










(4c)






Taking into account the importance of facilitating access to books, newspapers and periodicals for persons who are blind, visually impaired or otherwise print-disabled, adapted and audio electronic books, newspapers and periodicals are to be understood as not wholly or predominantly consisting of music or video content. Therefore, it should be possible to apply reduced VAT rates to publications in those formats.











Amendment 8


Proposal for a directive


Recital 5









Text proposed by the Commission



 



Amendment











(5)


Distortions of competition could arise where the mechanism used for taxation would not be based on the destination principle. That is notably so with travel facilities supplied as a single service under the margin scheme for travel agents and goods supplied under the special arrangements for second-hand goods, works of art, collectors’ items and antiques but also in certain cases involving goods or services, such as financial services, that are exempted without right of deduction but for which a right of taxation may be granted. In order to mitigate any such distortions, a list of supplies of goods and services subject to the standard VAT rate (‘negative list’) should be established based on the statistical classification of products by activity. The list should be reviewed 
every five years.








 








(5)


Distortions of competition could arise where the mechanism used for taxation would not be based on the destination principle. That is notably so with travel facilities supplied as a single service under the margin scheme for travel agents and goods supplied under the special arrangements for second-hand goods, works of art, collectors’ items and antiques but also in certain cases involving goods or services, such as financial services, that are exempted without right of deduction but for which a right of taxation may be granted. In order to mitigate any such distortions, a list of supplies of goods and services subject to the standard VAT rate (‘negative list’) should be established based on the statistical classification of products by activity. 
Every two years
, the list should be reviewed 
by means of an implementing act, based on evidence provided by the Commission
.









Amendment 9


Proposal for a directive


Recital 6









Text proposed by the Commission



 



Amendment











(6)


To avoid unnecessary complexity and subsequent rise in business costs, in particular for intra-Community trade, goods and services that can be used only as intermediate input to an economic activity should not be eligible for reduced rates in a definitive VAT system. Such rates should be applied 
only
 for the benefit of final consumers and the setting of such rates should ensure equal treatment of similar goods or services supplied by different taxable persons. They should therefore be applied to pursue, in a consistent manner, an objective of general interest.






 








(6)




The current fragmentation of the VAT system within the internal market places obstacles in the way of the development of small and medium-sized enterprises (SMEs).
 To avoid 
further
 unnecessary complexity and subsequent rise in business costs, in particular for intra-Community trade, goods and services that can be used only as intermediate input to an economic activity should not be eligible for reduced rates in a definitive VAT system. Such rates should be applied for the benefit of final consumers and the setting of such rates should ensure equal treatment of similar goods or services supplied by different taxable persons. They should therefore be applied to pursue, in a consistent manner, an objective of general interest.









Amendment 10


Proposal for a directive


Recital 6 a (new)









Text proposed by the Commission



 



Amendment





 


 










(6a)






With particular focus on the needs of SMEs engaging in intra-Community cross-border businesses and in order to facilitate trade and increase legal certainty in the single market, the Commission, in cooperation with Member States, should establish a comprehensive and publicly accessible Union VAT Web information portal for businesses. That multilingual portal should provide quick, up-to-date and accurate access to relevant information about the implementation of the VAT system in the different Member States and in particular about the correct VAT rates for different goods and services in the different Member States, as well as the conditions for zero-rate. Such a portal might also help to address the current VAT gap.











Amendment 11


Proposal for a directive


Recital 6 b (new)









Text proposed by the Commission



 



Amendment





 


 










(6b)






A number of economic activities within the Union have focused on sustainable development based on a greener economy on the one hand and inclusive growth on the other. Such domains are of key importance in the sustainable development of rural and outlying areas, contributing to the economic and social revitalisation of rural areas. Given their close attachment to social, health, environmental, nutritional, cultural and gender equality issues, their specific activities are fully in line with ‘Strategy 2020’ambitions and Commission objectives. In this regard, Member States should therefore seize the opportunities offered by Article 98(1) and (2) of this Directive, provided that they respect its principles, taking particular account of the implications for their public finances and for the Union budget.











Amendment 12


Proposal for a directive


Recital 7









Text proposed by the Commission



 



Amendment











(7)


For the public finances of Member States to remain sound and in order to prevent excessive macroeconomic imbalances, an appropriate level of revenue should be ensured. Given that VAT is an important source of revenue, it is therefore vital, as a safeguard for national budgets, to set a minimum for the weighted average rate to be respected at any time by the Member States.






 








(7)


For the public finances of Member States to remain sound and in order to prevent excessive macroeconomic imbalances, an appropriate level of revenue should be ensured. Given that VAT is an important source of revenue, it is therefore vital, as a safeguard for national budgets 
and the Union budget
, to set a minimum for the weighted average rate to be respected at any time by the Member States.









Amendment 13


Proposal for a directive


Recital 8









Text proposed by the Commission



 



Amendment











(8)


While the application of different rates in certain remote areas continue to be possible, it 
it
 necessary to ensure that the standard rate respects the minimum of 15%.






 








(8)


While the application of different rates in certain remote areas continues to be possible, it 
is
 necessary to ensure that the standard rate respects the minimum of 15% 
and the maximum of 25 %
.









Amendment 14


Proposal for a directive


Article 1 – paragraph 1 – point 1a (new)

Directive 2006/112/EC
Article 97








Present text



 



Amendment





The standard rate shall 
not be lower than 15 %.




 










(1a)





Article 97 is replaced by the following:






‘
The
 standard rate 
shall permanently remain at least
 15 % 
and shall not exceed 25 %.
’






Amendment 15


Proposal for a directive


Article 1 – paragraph 1 – point 2

Directive 2006/112/EC
Article 98 – paragraph 2








Text proposed by the Commission



 



Amendment






2.   By way of derogation from paragraph 1, Member States may in addition to the two reduced rates apply a 
reduced
 rate lower than the minimum of 5% and an exemption with deductibility of the VAT paid at the preceding stage.



 



2.   By way of derogation from paragraph 1, Member States may in addition to the two reduced rates apply a 
reduced
 rate lower than the minimum of 5% and an exemption with deductibility of the VAT paid at the preceding stage.






Amendment 16


Proposal for a directive


Article 1 – paragraph 1 – point 2

Directive 2006/112/EC
Article 98 – paragraph 3 – subparagraph 1








Text proposed by the Commission



 



Amendment





Reduced rates and exemptions applied pursuant to paragraphs 1 and 2 shall 
only
 benefit the final consumer and shall be applied to pursue, in a consistent manner, an objective of general interest.


 


Reduced rates and exemptions applied pursuant to paragraphs 1 and 2 shall benefit the final consumer and shall be applied to pursue, in a consistent manner, an objective of general interest. 
Priority shall be given to goods or services having a positive impact on the general interest, such as cultural, social or environmental benefits
.





Amendment 17


Proposal for a directive


Article 1 – paragraph 1 – point 5

Directive 2006/112/EC
Article 100 – paragraph -1 (new)








Text proposed by the Commission



 



Amendment





 


 




The Commission is empowered to amend the scope of Annex IIIa by means of an implementing act, when necessary and provided there is evidence related to distortion of competition justifying the update of the list of supplies of goods and services.







Amendment 18


Proposal for a directive


Article 1 – paragraph 1 – point 5

Directive 2006/112/EC
Article 100 – paragraph 1








Text proposed by the Commission



 



Amendment





By 31 December 
2026
 and every 
five
 years thereafter, the Commission shall submit to the Council a report on the scope of Annex IIIa, accompanied by any proposals to amend that Annex, where necessary.


 


By 31 December 
2021
 and every 
two
 years thereafter, the Commission shall submit to the 
European Parliament and the
 Council a report on the scope of Annex IIIa, accompanied by any proposals to amend that Annex, where necessary.





Amendment 19


Proposal for a directive


Article 1 – paragraph 1 – point 5 a (new)

Directive 2006/112/EC
Article 100 a (new)








Text proposed by the Commission



 



Amendment





 


 








(5a)


The following Article is inserted:








‘Article 100a




The Commission, in cooperation with the Member States, shall establish a comprehensive, multilingual and publicly accessible Union VAT Web Information Portal on which businesses and consumers can quickly and effectively obtain accurate information on VAT rates – including which goods or services benefit from reduced rates or exemptions – and all relevant information on the implementation of the definitive VAT system in the different Member States.
’







Amendment 20


Proposal for a directive


Annex

Directive 2006/112/EC
Annex IIIa – row 5 – column B








Text proposed by the Commission



 



Amendment





11.01


 


11.01




11.02


 


11.02




11.03


 


11.03




 


 




11.04






11.05


 


11.05




47.00.25


 


47.00.25





Amendment 21


Proposal for a directive


Annex

Directive 2006/112/EC
Annex IIIa – row 7 – columns C and D







Text proposed by the Commission





Supply, hire, maintenance and repair of bicycles, baby carriages and invalid carriages


30.92




33.17.19




47.00.65




 


47.00.75




 


77.21.10




 


77.29.19




 


95.29.12






Supply of motor cars and other motor vehicles principally designed for the transport of <10 persons, incl. station wagons and racing cars, other than those vehicles with spark-ignition engine only or with compression-ignition internal combustion piston engine (diesel or semi-diesel) only






29.10.24








45.11.2








45.11.3













Amendment





Supply, hire, maintenance and repair of bicycles, baby carriages and invalid carriages


30.92




33.17.19




47.00.65




 


47.00.75




 


77.21.10




 


77.29.19




 


95.29.12





Amendment 22


Proposal for a directive


Annex

Directive 2006/112/EC
Annex IIIa – row 10 – columns C and D







Text proposed by the Commission







None






None













Amendment







Pacemakers; hearing aids






26.60.14








(1)  OJ L 347, 11.12.2006, p. 1.

(2)  Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on an action plan on VAT – Towards a single EU VAT area – Time to decide (COM(2016)0148 of 7 April 2016)

(3)  Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the follow-up to the Action Plan on VAT – Towards a single EU VAT area – Time to act (COM(2017)0566 of 4 October 2017).

(4)  OJ L 347, 11.12.2006, p. 1.

(5)  Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on an action plan on VAT – Towards a single EU VAT area – Time to decide (COM(2016)0148 of 7 April 2016)

(6)  Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the follow-up to the Action Plan on VAT – Towards a single EU VAT area – Time to act (COM(2017)0566 of 4 October 2017).

(7)  
COM(2015)0192