EC gives TPG space on German and UK postal markets
The European Commission (EC) wants to give TPG Post, the mail business of Dutch mail and logistics group TNT NV, and other foreign competitors an equal chance on the German and UK postal markets while abolishing the payment of value added tax (VAT) on mail services, the EC said on April 10, 2006.
An exemption from VAT on these markets has been granted only to the former monopolists Deutsche Post and Royal Mail for most of their services.
According to the European Commissioner Laszlo Kovacs (fiscal affairs), the VAT differences are not in line with the European Union (EU) competition rules.
Kovacs has asked Germany and the UK to put as soon as possible an end to the competition disadvantages for other companies. Sweden was also asked to introduce a VAT exemption on mail services. The VAT payment on mail services is to be abolished within the whole EU before the liberalisation of the European postal market by 2009.
According to TNT (www.tnt.com) the VAT differences are the biggest obstacle to the liberalisation of the postal markets in the EU. The liberalisation of the Dutch postal market is scheduled as of 2007.
www.dft.nl
Source: De Financiele Telegraaf
TAXATION : VAT ON POSTAL SERVICES MAKES COMMISSION SEE RED
European Intelligence Wire 04-11-2006
Legal action has been taken against the United Kingdom, Germany and Sweden over their policies on applying VAT to postal services. The European Commission is miffed with the UK and Germany for only exempting formerly state-owned monopolies from VAT. It is annoyed with Sweden because of the latter’s refusal to exempt any postal operator from VAT. The infringement cases, announced on 10 April, take the form of ‘letters of formal notice’, the first stage of proceedings that may ultimately lead to the countries being taken to the EU Court of Justice.
TEST CASES The Commission argues that these national policies are causing distortions of competition. Moreover, they are flouting the Sixth VAT Directive (1977/388/EEC) under which postal operators that are responsible for providing the ‘universal postal service’ should be VAT exempt. It admits it has received complaints about other countries too on the issue but it has decided to single out these three as test cases. NEW DIRECTIVE EU Taxation and Customs Commissioner Laszlo Kovacs also took the opportunity to urge the EU Council of Ministers to adopt a Directive on VAT on postal services that the Commission proposed in May 2003. This proposal would force all postal operators – public and private – to apply VAT on the services they provide. It also foresees a reduced VAT rate for postal items weighing less than 2kg. The aim is to end discrimination between postal operators in light of the ongoing liberalisation of the market. Businesses who receive postal services would benefit too, the Commission argues, as they could deduct the VAT they pay. However, until now the draft Directive has remained blocked in Council as member states have been deadlocked on the Commission’s proposal.
