(Consultation procedure)

The European Parliament,

–   having regard to the Commission proposal to the Council (COM(2007)0381),

–   having regard to Article 93 of the EC Treaty, pursuant to which the Council consulted Parliament (C6-0253/2007),

–   having regard to the Commission communication to the Council and the European Parliament on VAT rates other than standard VAT rates (COM(2007)0380),

–   having regard to Rule 51 of its Rules of Procedure,

–   having regard to the report of the Committee on Economic and Monetary Affairs (A6-0469/2007),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC Treaty;

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 amend the Commission proposal substantially;

5.  Instructs its President to forward its position to the Council and the Commission.

Text proposed by the Commission   Amendments by Parliament Amendment 1 RECITAL 1 (1)  Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, provides for certain derogations in the field of VAT rates. Some of these derogations expire at a precise date, while others last until the adoption of the definitive arrangements. (1)  Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, provides for certain derogations in the field of VAT rates. Some of these derogations expire at a precise date, while others last until the adoption of the definitive arrangements for intra-Community transactions. Amendment 2 RECITAL 1 A (new) (1a)  In accordance with the principle of subsidiarity, the Community should not impinge upon Member States' competence in the area of indirect taxation beyond what is necessary to ensure the proper functioning of the internal market as regards the setting of VAT rates. In particular, locally supplied services, in so far as they do not involve cross-border activities, have, in principle, no effect on the functioning of the internal market. Amendment 3 RECITAL 2 (2)  In order to ensure more equality of treatment among Member States, derogations that do not conflict with a smooth functioning of the internal market and with other Community policies should be prolonged until the end of 2010, date of the expiry of the minimum of 15% for the standard rate and of the experiment on the application of a reduced rate to labour intensive services. By contrast, certain derogations should not be prolonged. (2)  In order to ensure equality of treatment among Member States, derogations that do not conflict with a smooth functioning of the internal market and with other Community policies should be prolonged until the end of 2010, date of the expiry of the minimum of 15% for the standard rate and of the experiment on the application of a reduced rate to labour intensive services. On specific grounds, certain derogations should not be prolonged. Amendment 4 RECITAL 2 A (new) (2a)  The period until 31 December 2010 should be sufficiently long to allow the Council to reach a conclusion on abandoning its target of introducing a definitive system for the taxation of intra-Community transactions, based on the principle of taxation in the country of origin and on an approach towards the approximation of VAT rates. Amendment 5 RECITAL 2 B (new) (2b)  The period until 31 December 2010 should also be sufficiently long to allow the Council to reach a conclusion on the final structure of VAT rates, which should include options allowing Member States to apply different VAT rates, provided that the smooth functioning of the internal market and other Community policies are ensured. During that period, the current rules should be applied in a prudent way, taking due account of borderline cases, so that Member States are not precluded from pursuing legitimate policy objectives before of after the Council decides on the final structure of value added tax. Amendment 6 RECITAL 2 C (new) (2c)  In accordance with the principle of subsidiarity, and after the Council has decided on a definitive system for the taxation of intra-Community transactions, Member States should be able to apply reduced rates or, in exceptional circumstances, possibly even zero rates, to basic goods and services such as food and medication for clearly defined social, economic and environmental reasons and for the benefit of the final consumer. Amendment 7 RECITAL 2 D (new) (2d)  In accordance with the principle of subsidiarity and after the Council has decided on a definitive system for the taxation of intra-Community transactions, Member States should be able to apply reduced rates or, in exceptional circumstances, possibly even zero rates to the provision of locally supplied services, including services and provision of goods linked to education, welfare, social security work and culture. Amendment 8 RECITAL 2 E (new) (2e)  Any future system for the taxation of intra-Community transactions should be transparent and based on administrative simplicity. Amendment 9 RECITAL 6 (6)  The derogations granted to Hungary and Slovakia should not be prolonged because those Member States have not applied or no longer apply a reduced rate. (6)  It should be highlighted that those Member States that have not applied or no longer apply the temporary VAT derogations that expired in 2007 should be granted, until 31 December 2010, the opportunity to avail themselves of such temporary derogations.