Tag: European Commission

EU commission criticizes Deutsche Post's VAT exemption

Posted by | Mar 19, 2008 | |

The EU commission is criticizing Deutsche Post World Net AG’s VAT exemption, Frankfurter Allgemeine Zeitung reported, citing a letter the commission wrote to the German government.

EU commissioner Charlie McCreevy has advised the German government not to hamper the opening of the EU’s mail markets by unfair regulation, it said.

Unlike its German competitors, Deutsche Post is exempted from charging value added taxes on its products in return for the universal service it offers to ensure mail is delivered to remote regions.

The German cabinet is set to decide on tax regulations for the German postal market over the coming days, the report said.

While finance minister Peer Steinbruck of the Social Democrats favours maintaining Deutsche Post’s tax privilege, economy minister Michael Glos from conservative bloc CDU/CSU favours abolishing it.

In addition to the VAT exemption, the government last fall decided to make mandatory for its competitors the minimum wages paid at Deutsche Post.

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Deutsche Post head under fire for selling shares at key moment

Posted by | Dec 6, 2007 | |

Deutsche Post Chairman Klaus Zumwinkel came under fire Thursday for selling share options after it became clear the German government would push through a minimum wage for the sector.

Economics Minister Michael Glos queried the timing of the sale in remarks to the mass-circulation Bild newspaper

Deutsche Post rejected the criticism, saying there were only restricted windows when board members could sell shares, and Zumwinkel had made use of one of them in a legitimate way.

Deutsche Post surrenders its monopoly on delivering letters in Germany at the end of the year. It has already surrendered its parcel monopoly as part of the privatization process that began in 1991.

Zumwinkel, who sold his share options on Monday, cashing in 4.73 million euros to make a profit of almost 100 per cent, has been a vigorous critic of the postal liberalization programme instituted by the European Union.

Presenting half-year results in August, he referred to an “unparalleled slashing of worker benefits” and accused the European Commission of creating “chaos” in the postal market.

Deutsche Post’s competitors in Germany were paying 40 per cent less than the starting pay at Deutsche Post. “A stop must be put to this,” he said.

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European Commission plots action over postal VAT

Posted by | Jul 27, 2007 | |

The European Commission is threatening to take the Government to the European Court of Justice unless it amends the law which allows Royal Mail to be exempt from paying VAT, in a move which could force a huge hike in postal rates.

The postal operator’s rivals have been pushing for a review for months, saying the exemption gives Royal Mail a significant price advantage.

The EC has formally requested that the UK, as well as Germany and Sweden, amends its legislation on the exemption.

The threat is part of EC plans to ensure fair competition between former monopolies and market entrants. The EC has described Royal Mail’s VAT exemption as ‘the single most important obstacle to achieving effective competition in this sector’.

The Commission also claims to have received a number of complaints that the different tax liabilities distort competition and that Royal Mail should be subject to the same tax regulations as its competitors.

Laszlo Kovacs, European Commissioner for Taxation and Customs, says: “The EC, as guardian of the EC Treaties, is obliged to ensure that EU rules are applied in a harmonised manner across the Community.”

A Royal Mail spokesman says: “Royal Mail remains opposed to the imposition of VAT on our postal charges. While the issue of VAT is a matter for the UK Government, we have said that an increase in stamp prices as a result of the imposition of VAT is the last thing we want for any of our customers, particularly charities and small business.”

Royal Mail also questioned the actions of the European Commission in pursuing its VAT exemption, when large parts of the EU will not have fully liberalised postal markets until 2009 at the earliest, under the latest EU timetable. The UK’s postal market was opened up to full competition in January 2006.

Postcomm recently urged the EC to change its VAT framework so that all postal operators can pay a reduced uniformed VAT rate to make the market ‘a level playing field’ for all operators. The independent postal service regulator welcomed UK Mail’s recent move to make it exempt from paying VAT on its downstream access.

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EC gets tough on Royal Mail's VAT exemption

Posted by | Jul 25, 2007 | |

Royal Mail, reeling from a series of strikes by postal workers over pay and working practices, suffered a fresh blow on Tuesday when the European commission stepped up its threat to take the government to court over its decision to exempt all the former monopoly operator’s services from VAT.

Laszlo Kovacs, EU tax and customs commissioner, formally requested the government to amend UK legislation allowing Royal Mail to charge zero VAT on high-value bulk mail and commercial deliveries for which rivals must pay the standard rate of 17.5 pct..

The zero rate applied to stamps for normal deliveries to more than 20m British homes under the “universal service obligation” (USO) — guaranteeing one delivery a day, six days a week, to every address in the UK for the same price — would be unaffected.

The commission’s move is the second stage in the infringement procedure and could lead it to take Britain to the European court of justice, Europe’s highest court. UK laws on exemption for all Royal Mail’s services are deemed incompatible with the sixth VAT directive.

The government showed little sign of giving way to Brussels on the issue. “We are satisfied that our position is consistent with the EU VAT rules in this area, which require VAT exemption for services provided by the ‘public postal services’,” a Treasury spokesman said.

Royal Mail said it remained opposed to the imposition of VAT on its postal charges. “While the issue of VAT is a matter for the UK government, we have said that an increase in prices as a result of the imposition of VAT is the last thing we want for any of our customers, particularly charities and small businesses.”

A spokesperson for TNT Post, one of Royal Mail’s rivals, said: “This action supports our view that the VAT distortion needs to be removed.”

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