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Procedure : 2010/0179(CNS)
Document stages in plenary
Document selected : A7-0325/2010

Texts tabled :


Debates :

PV 22/11/2010 - 14
CRE 22/11/2010 - 14

Votes :

PV 23/11/2010 - 6.15
Explanations of votes
Explanations of votes

Texts adopted :


Monday, 22 November 2010 - Strasbourg OJ edition

14. Common system of value added tax and duration of obligation to respect a minimum standard rate (debate)
Video of the speeches

  President. – The next item is the report by Mr Casa, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a Council directive amending Directive 2006/112/EC on the common system of value added tax, with regard to the duration of the obligation to respect a minimum standard rate [COM(2010)0331 – C7-0173/2010 – 2010/0179(CNS)] (A7-0325/2010).


  David Casa, rapporteur. (MT) Madam President, first of all, I would like to draw this Chamber’s attention to the fact that an important vote is currently under way within the Committee on Economic and Monetary Affairs, and therefore I have to excuse many of the Members who are not going to be present here as we are running late and the voting process has only just begun.

As the President rightly stated, this report I drew up is extremely important as it concerns the VAT system that we are seeking to amend. Now, as everyone knows, the negotiations in order to modify the permanent VAT system have been ongoing for quite some time, yet no significant headway has been made. The transitory system that has been used since 1993 is continuously being extended, and we all know that this situation is not a sustainable one and that we need to find a more lasting solution.

The current transitory system is not yielding the desired results when it comes to the internal market. This system diminishes businesses’ efficiency and also restricts their effectiveness between borders. It is also worrying that this system gives rise to complex forms of fraud, such as carousel fraud, which we discussed recently within this very Parliament. These bear a seriously negative impact on the Member States’ income. The solution facing us is not an easy one, and the right solution can be adopted only after an in-depth debate and long consultation periods have taken place.

We are all aware of the Commission’s recent commitment to draw up a Green Paper in the near future in order to stimulate a discussion on this issue. The report I am in charge of urges the Commission to ensure that the process is an efficient one and that we do everything in our power to ensure that, firstly, the new system will improve the internal market’s effectiveness; secondly, that this new system reduces the burdens on the business sector; and thirdly, that it combats fraud as effectively as possible.

This report, which, as we know, has already been approved by the Committee on Economic and Monetary Affairs, also urges the Commission to ensure that the concrete proposals will be made public by 2013. Let me underline this last point: I am not proposing that they should have a system that is adopted and in place by 2013. I am saying that the proposals must be made public by 2013.

What I would like, however, and I believe I am expressing the viewpoint of the Members in this Chamber, is for this new system to be up and running before the end of this legislature, so that the current transitory system need not be re-extended. Whilst we will approve the extension of the new system, we expect concrete steps to be taken without delay in reflecting upon these new proposals.

I would like to thank my colleagues, especially the shadow rapporteurs, for this report, and I augur that more fervent discussions on this topic will take place, which will give way to a speedy solution.




  Algirdas Šemeta, Member of the Commission. – Mr President, I would like to thank the European Parliament and, in particular, David Casa, for his constructive and quick report on the Commission’s proposal to extend by five years the existing rules on the minimum standard VAT rate. This proposal is simple and is not controversial.

A quick opinion of the European Parliament on the Commission’s proposal will allow the Council to adopt the proposal before the end of the year – just in time, before the current rule expires. The proposal has indeed already been discussed in the Council working party. No obstacle appeared to a speedy approval.

As stated by David Casa, the Commission’s proposal will give businesses the necessary legal certainty and allow further evaluation of the appropriate level of the standard VAT rate at EU level.

The Commission will indeed launch very soon a broad debate on the future of VAT in order to evaluate and address the numerous shortcomings in the EU VAT system such as its complexity, the high level of administrative burdens for businesses, and fraud.

Before the end of the year, I will propose to my fellow Commissioners the publication of a Green Paper on the evaluation of the current system and preferable ways forward for the future. I am looking forward to reactions as regards such issues as how to achieve a simpler, more robust and modern VAT system and how to reduce collection and compliance costs for businesses, in particular, SMEs, whilst limiting fraud and providing flexibility for Member States. On the basis of the results obtained, the Commission will define its future policy in the VAT area in a Communication on the way forward at the end of 2011.

The amendments tabled clearly demonstrate the Parliament’s interest in participating in this discussion on the future VAT strategy. I welcome this sign of interest and hope to have a fruitful debate with you on this important issue at a later stage. However, I consider that these amendments are outside the scope of the proposal discussed today, which is limited to extending the period during which the minimum standard rate applies. Moreover, some of the amendments pre-empt a debate we should have on the basis of the Green Paper. This applies, in particular, to the amendment which requests the Commission to come up with a proposal on definitive rules on VAT rates by 2013.

At this stage, the Commission cannot commit on a date to table a proposal on VAT rates. It cannot predict the outcome of the consultation, whose scope will be broader than the VAT rates. I hope that this consultation will give a clear idea of the priorities for the future of VAT. The Commission’s planning for future legislative proposals will therefore depend to a great extent on the outcome of this consultation.


  Sari Essayah, on behalf of the PPE Group. (FI) Mr President, the Commission’s proposal focuses on allowing the current system to continue to run until 2015 and an endeavour to restrict tax rate bands to 10%. This is very important, because otherwise, competition between Member States might be distorted in certain sectors.

Central to this parliamentary report is the notion that it will not be long before the Commission initiates a broad programme of consultation to establish a new system of value added tax. In my opinion, the amendments that Members have tabled are, contrary to the view of the Commissioner, extremely important, as even at this stage, we want to mark the direction in which we hope that this new VAT system will go. In future, we need to be able to lighten the administrative burden associated with VAT and make it as easy as possible for small and medium­sized enterprises, in particular, to produce reports, though at the same time effectively combating VAT fraud.

The public economy in many European countries at present is in a mess, and one solution proposed is to start to raise VAT rates. However, that will not be of any help in countries where it is common to avoid paying VAT. Here, I would like to refer to the report by Mr Casa adopted earlier on here. It focused, in particular, on ways to combat VAT fraud in connection with goods and services that were prone to this sort of abuse. I hope that the Commission will actually start to do something about this in the future.


  George Sabin Cutaş, on behalf of the S&D Group.(RO) Mr President, as indicated in the Council’s proposal for a directive, the minimum VAT rate has helped keep the system operating at an acceptable level.

I believe that we should consider having a common regulatory framework which would include the conclusions reached following the experience of the budgetary imbalances highlighted by the financial crisis. A new European VAT strategy is required, focused on reducing red tape and the fiscal obstacles which hamper businesses, especially small and medium-sized enterprises. We must also consider the need to prevent and combat fraud. However, until this strategy has been finalised, I believe that the decision to extend the transitional provision on the minimum VAT rate until 31 December 2015 is intended to reassure the business community, prevent structural imbalances in the European Union and encourage harmonisation of fiscal legislation.

Pending the Commission Green Paper on the review of the VAT system, I would like to highlight the tendency of some governments facing recession to increase the VAT rate to 24-25%, as has happened in Romania and Hungary. The relative commitment to keep the maximum VAT rate within a 10% range above the 15% limit has been observed up to now. However, I believe that we need an absolute ban in this respect to prevent any breaches of the 25% threshold. Let us not forget that beyond these statistics, we are dealing with ordinary citizens whose standard of living is being increasingly affected by austerity policies and excessive taxation.

I would like to end by saying that overtaxation is not a remedy for an ailing economy. It only serves to prolong the agony.


  Olle Schmidt, on behalf of the ALDE Group.(SV) Mr President, Commissioner, I would like to thank the rapporteur very much. As a matter of principle, I believe that we should avoid controlling consumption by means of VAT rates. However, as long as exceptions and reduced VAT rates do not obviously interfere with the free market, we have hitherto chosen to accept differences between EU Member States. However, as you well know, Professor Monti states in his report on the single market that current differences can also adversely affect the single market. It is therefore important for us to call for a definitive system of VAT rates and to clearly point out that a review of the VAT Directive should use the single market strategy as a guideline rather than the separate interests of the individual countries.

It is also important, as the Commissioner says, for us to focus on reducing the administrative burdens, removing tax barriers and improving the business environment, particularly for small and medium-sized enterprises, while at the same time ensuring that we create a system that stands firm against fraud.

Taxes are, of course, a very national matter and one in which the nations’ self-determination is important. At the same time, it is important to remember that a well-functioning internal market probably requires more and closer cooperation, including with regard to matters of taxation, than we have today. I therefore hope that the Commission – and the Commissioner – will have the courage to tackle these issues in its forthcoming proposals and that these proposals will actually take as their starting point a well-functioning internal market, despite national opposition. Difficult questions in difficult times require detailed analysis.


  Jaroslav Paška (EFD). (SK) Mr President, in the submitted proposal, the Commission proposes applying a minimum standard VAT rate of 15% for a further 5 years up to 2015. Even though I understand the Commission’s argument that it wants, through this directive, to provide companies with legal certainty, I think that the VAT analysis requires some very intensive work. The reason for this, in my opinion, is that many companies and many cases of tax losses in cross-border trade show that the VAT system in Europe is very badly organised.

It is not just a problem of the actual rate; it is a problem of the rules applied on the national market and in international trade, which allow these scams to operate quite legitimately in many cases. I would therefore like to use my speech to make a call for the review of the entire VAT system, which I think would be in the interests both of our economies and of our businesses. I consider a deadline of 2013 to be quite realistic, and we should simply move forward on this problem not by sorting out the rates, but by sorting out the rules.


  Andrew Henry William Brons (NI). – Mr President, taxes are, at best, a necessary evil, and should always reflect spending needs. A tax rate that is set before spending needs are decided is a recipe for taking people’s money and then deciding what to spend it on. It is a recipe for profligacy.

Harmonisation of VAT rates to a common standard and a common reduced rate, which was the proposal of the Commission back in 1993, would take yet more power out of the hands of Member States. The levying of taxation is one of the defining characteristics of a sovereign state. It will be yet another step towards the sovereign state being the European Union, and Member States simply being powerless appendices to it. Combating fraud and easing burdens on SMEs are red herrings. VAT harmonisation is about centralisation and the consolidation of EU power.


  Elena Băsescu (PPE).(RO) Mr President, the aim of the new VAT strategy must be to reduce administrative burdens, remove fiscal obstacles and improve the business climate, especially for SMEs. There is a noticeable degree of imbalance in relation to the development of the internal market. For this reason, European businesses have been put at a disadvantage. In addition, the VAT system, as currently designed and implemented by Member States, has weaknesses that fraudsters use to their advantage.

I would like to call on the Commission to present the results of its analyses. It will also have to arrange consultations on the new VAT strategy with all stakeholders. In this respect, common aspects will have to be dealt with, such as reduced VAT rates, exemptions from the scheme, the option to set a maximum rate and, last but not least, the place of taxation of intra-EU supplies.


  Algirdas Šemeta, Member of the Commission. – Mr President, I want to thank you for the comments and the views expressed during this debate. I am glad to see that the European Parliament and the Commission share views on the need to rethink the current VAT system.

As I indicated in my opening remarks, I welcome the spirit of the amendments relating to the future of VAT. Nevertheless, the Commission considers that this technical proposal only concerns the periodical extension of the minimum level of the standard VAT rate.

The outcome of the consultations on a new VAT strategy is only mentioned in order to justify the reason why it is premature to set a permanent standard rate level. There is therefore no need to refer to the aims and the framework of the new VAT strategy in this context at this stage.

I also repeat that the Commission cannot commit today on a date for the future legislative proposal on rates. We will first need to have the debate on the future of VAT, which will give a clear idea on the priorities for the Commission. The outcome of this consultation will steer the Commission’s planning for the future legislative proposal.

We are finalising our work on the Green Paper and, in the coming weeks, we will produce the real questions for debate for everyone involved: the general public, Members of the European Parliament, stakeholders and the Member States. The questions which will be raised clearly address issues which were raised during today’s debate.

I am looking forward to fruitful debates in the coming months in order to enable the Commission to develop a much better strategy for VAT in the future.


  David Casa, rapporteur. (MT) Mr President, yes, I am indeed glad that the Commissioner has understood that we are calling for the drawing up of a Green Paper without delay in order to fuel a more in-depth debate on the Commission’s proposals. As my fellow Members in this Chamber have mentioned, we must quickly rid the system of all types of fraud and help the business sector as much as we can to eliminate the barriers that the current system creates. We also want to see a more effective internal market.

Today, we did not discuss what solutions are required. What we are asking of the Commission is to come up with proposals without delay so as to help instigate proper discussions on the new system, thus enabling us to improve upon what we currently have as soon as possible. I understand that the aim of this report is, in actual fact, to extend the time period. However, I would like to draw the Commission’s attention to the fact that we are eager for it to present us with proposals as promptly as possible, as this will allow us to share our own ideas in turn, and ultimately guarantee a fairer system for everyone.


  President. – The debate is closed.

The vote will take place tomorrow at 11:30.

Written statements (Rule 149)


  Franz Obermayr (NI), in writing. (DE) For most EU Member States and third countries with internationally interlinked markets, VAT (or sales tax) is one of the main sources of financing for the state. Sales tax is therefore at least as important as direct taxes. Maintaining a minimum standard rate of 15% for the next 5 years will aid competition in the internal market and will provide legal certainty for companies. With regard to the reduced VAT rates in the EU, in the case of reduced VAT rates on certain services, such as repairs, hairdressing or beauty treatment businesses, the Commission must also take care to avoid distortions of competition. Such forms of tax relief have a negative effect on Austrian small businesses, for example, which may not be able to stand up to competition from Slovakian or Hungarian service providers. The solution to this is as follows: YES to the targeted subsidising of SMEs, including by means of sales tax, BUT while avoiding distortions of competition between the Member States.

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