PostEurop call Council of the European Union to resume negotiations on VAT legislation for postal services
The postal industry needs a reliable VAT legislation. The 6th VAT Directive no longer provides for legal certainty as demonstrated by the infringement procedures most recently launched by the European Commission. Moreover, taking into account the changes that the industry has undergone in the past 10 years, modernizing VAT regulations seems reasonable.
On May 5th 2003, the European Commission issued a “proposal for a directive amending directive 77/388/EEC as regards VAT on services provided in the postal sector” (COM/2003/234).
It provides for equal treatment of postal services in term of taxation. It also introduces an option to apply reduced VAT rates for certain postal services with the intention to limit any increase in postal prices due to the introduction of VAT.
On March 11th 2004, the European Parliament agreed to the introduction of VAT in public postal services. The European Parliament has proposed to make the application of a reduced rate mandatory.
The deliberations (2 July 2003 to 15 June 2004) within the Council failed in the absence of the required unanimity and negotiations have been suspended for about 3 years now.
On 23rd March 2006, the European Commission launched infringement proceedings by sending letters of formal notice to the UK, Sweden and Germany on the VAT application of postal services.
The rules governing the application of VAT should not be left to finally decisions by the ECJ based on an interpretation of the 6th VAT Directive (dating back to 1977). The decision how to apply VAT on postal services is essentially a political one and therefore needs to be agreed upon by the Council.
