VAT as eligible expenditure under the EAFRD
27.5.2010
Question for written answer E-3992/2010
to the Commission
Rule 117
Véronique Mathieu (PPE)
Pursuant to Article 71(3) of Council Regulation (EC) No 1698/2005[1] on the European Agricultural Fund for Rural Development (EAFRD), VAT on operations where the contracting authority is a body governed by public law does not in any way constitute eligible expenditure under rural development programmes. The aim of this provision seems to be to avoid any risk subsidising costs not actually borne by the beneficiaries. By strengthening this principle in the regulation governing the period 2007‑13, the Commission is making a laudable attempt to rule any possible irregularities. However, I would like to draw its attention to the impact of this decision on bodies governed by public law that do not reclaim VAT. As beneficiaries which are bodies governed by public law are excluded irrespective of the arrangements governing their liability for VAT, these bodies must also submit their statements of expenditure net of tax. The practical consequences are disastrous for public bodies such as regional natural parks. They pay VAT, but must submit their statements of expenditure net of tax in order to benefit from EAFRD support. Since they do not have their own funds, they cannot finance the non-eligible part of their expenditure in the form of VAT and are excluded from EAFRD support. In keeping with the principle that VAT not reclaimed by public bodies should be eligible for EAFRD support, could the Commission consider applying the arrangements governing VAT liability for non-taxable persons laid down in the first subparagraph of Article 4(5) of Directive 77/388/EEC[2]?
OJ C 170 E, 10/06/2011