CEEP Opinion on the EU VAT Action Plan - PDF

Executive summary

  • The VAT Directive foresees a specific and balanced regime for public bodies and activities in the public interest which reflects their key role in the social market economy as recognized by the Treaty and respects the diversity of their forms of organisation across Member States. Existing possibilities to exempt and apply reduced VAT rates are crucial to guarantee quality and affordability of public services, even more in times of fiscal consolidation.
  • Hence, CEEP welcomes the gradual and pragmatic approach proposed by the European Commission on reduced VAT rates in the VAT Action Plan and welcomes the status quo regarding existing reduced rates. However, a one-size-fits-all approach, i.e. a single European list, does not seem appropriate considering the diversity of tax policies across Member States.
  • CEEP has been following attentively discussions in the European Parliament on the VAT Action Plan, notably concerning VAT exemptions some SGEI providers are granted under existing EU VAT rules. CEEP believes that the current regime is balanced and should be maintained as it benefits citizens as end-users and achieving social policy goals.
  • In addition, there is room for clarifying at EU level the non-taxation of goods and services provided through public-public cooperation in order to avoid uncertainty arising from divergent national interpretations. In this regard, VAT rules should be more clearly aligned with EU public procurement rules which exempt certain forms of public-public cooperation.
  • Regarding the upcoming SME VAT package, CEEP emphasizes the need to define SMEs according to the fiscal rationale instead of implementing the current competition-based EU definition under recommendation 2003/361. The use of this definition would exclude SMEs with a public ownership of above 25% from benefiting from simplification measures, and thus many local public services enterprises.
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