MEP
IN ACTION
THE EUROPEAN PARLIAMENT
VAT SYSTEM’S REFORM IN EUROPE AND THE EQUINE SECTOR

On Tuesday, 2 October, I intervened during the debate on the VAT system’s reform which aims at harmonising and simplifying certain rules in order to, among others, fight against VAT fraud. During an exchange of views with the European Commissioner (see below), the latter confirmed the opportunity for Member States, after the validation of the reform project by the Council, to apply a reduced rate for the equine sector. This is a positive signal for the economic actors of the sector.

Jean Arthuis (ALDE). - Chair, Commissioner, your proposal for a VAT directive goes in the right way for at least two reasons.

First, it will enable to fight against the scandal of VAT fraud with efficiency, such as the “carousel” system. Second, you allow Member States to choose reduced rates instead of the normal rate.

You indicate, in your suggested modification at the article 98 and concerning the annex III of the 2006 directive, that reduced rates should serve the final consumer and should aim at reaching an objective of general interest with efficiency.

I would like to check with you whether it could be applied to the “horse” sector. The latter has a social, ecological and environmental dimension - country planning, rural development, sanitary activity, equitherapy and it is a not-vulnerable-to-relocation-jobs-creating sector. There is no risk of unfair competition in this area. Last week, we even attended, here at the Parliament, the presentation of a little horse that can serve as a guide for blind people. Therefore I would like to check with you, Commissioner, whether this sector can benefit from a reduced rate if a Member State so decides. This is what I understand from your proposal, and I thank you for the answer that you will provide us with. 

Miguel Arias Cañete, Member of the Commission. – Mr President, honourable Members of the European Parliament, I want to thank all of you for this debate which shows the high interest and need for deep reform of the European VAT system. There is significant progress that we have already made, because, since 2015, new rules for sales of e—services online came into force which allows Member States to collect VAT where the consumer is based, through a one—stop shop. Member States have also now agreed to extend this new system to services and goods online, delivering another boost for VAT collection in the European Union.

As I mentioned in the introduction, the European Union has also recently agreed on a ground—breaking new framework to exchange more information and boost cooperation between national tax authorities and law enforcement authorities.

However, after all the fundamental reform, a European Union VAT definitive system is still to be adopted by the Council. In his State of the Union speech, President Juncker called for an end of unanimity in taxation policy. Unanimity can block proposals that are in the interests of the majority and thus prevent companies and citizens from benefiting from a full single market.

The Commission will play its role in the reflection towards a chain of rules by presenting a communication in the coming months on qualified majority voting in the field of taxation. With your support, I am confident that the two proposals you will vote on will benefit from broad support and that progress can be achieved on all VAT proposals in the coming months.

Finally, in reply to the question from Mr Arthuis, yes, the horse sector can benefit from VAT reduced rates if the Member State so decides.