VAT ARRANGEMENTS APPLICABLE TO RADIO AND
TELEVISION BROADCASTING SERVICES (9405/06, 15428/06)
Letter from Rt Hon Dawn Primarolo MP,
Paymaster General, HM Treasury
I wrote to you on 15 June 2006,[15]
following the outcome of the June ECOFIN. I had previously submitted
an Explanatory Memorandum (EM 9405/06) concerning a Commission
Proposal to extend Directive 2002/38/EC, which concerns the VAT
treatment of radio and television broadcasting services and certain
electronically supplied services. In my letter I explained that
the Government had agreed in principle to a limited extension
of Directive 2002/38/EC for a period of six months.
This was because technical work on the Proposals
to simplify VAT obligations (EM 14248/04) was to continue under
the Finnish Presidency. In addition, although technical work on
the Proposal on the place of supply of services (EM 5051/04 and
11439/05) was more or less concluded, all these issues were to
return to Council towards the end of this year.
Technical work on the Proposals to simplify
VAT obligations has indeed carried on under the Finnish Presidency.
You will recall this is a package of VAT simplification measures
designed to ease the burden of VAT compliance, primarily for businesses
involved in cross-border trade. The package as a whole consists
of Proposals for two Council Directives and a Council Regulation
(which covers the administrative arrangements for the two Directives).
The Finnish Presidency has held a series of
Working Group meetings on the package and has made good progress
on the Directive on the refund procedure. But much more still
remains to be done on the other Directive, particularly in respect
of the proposed electronic One Stop Scheme.
The Finnish Presidency is returning all these
issues to ECOFIN on 28 November. As more remains to be done, the
Presidency intends giving a progress report and setting out the
work for next year. In the meantime, the provisions in Directive
2002/38/EC, which prevent non-EU businesses from being able to
provide certain services VAT free to EU consumers, expire on 31
December 2006. The Presidency will therefore ask Member States
to agree in principle to extend those arrangements once again.
However, although I also understand that the Commission has prepared
the necessary proposal, it has yet to emerge. The aim of the Presidency
will therefore be to reach agreement to the general approach at
ECOFIN and adopt the Directive in another Council before the end
of this year.
I have therefore attached an Explanatory Memorandum
(15428/06, not printed), on the basis of text not yet received.
I expect the content of the Proposal to be broadly similar to
the last time round, and once again, it will not be necessary
for any changes to be made to UK legislation.
I hope you find this helpful.
22 November 2006
Letter from Rt Hon Dawn Primarolo MP to
the Chairman
I wrote to you on 22 November 2006, attaching
an Explanatory Memorandum (15428/06) on a Commission Proposal
to extend Directive 2002/38/EC, which concerns the VAT treatment
of radio and television broadcasting services and certain electronically
supplied services. I also provided you with an update on technical
work on Proposals to simplify VAT obligations (Explanatory Memorandum
14248/04).
This is a package of VAT simplification measures
designed to ease the burden of VAT compliance, primarily for businesses
involved in cross-border trade. It is made up of Proposals for
two Council Directives and one supporting Council Regulation.
One Directive covers reform of the existing cross-border refund
procedure. The other would introduce a range of simplification
measures, including an electronic One Stop Scheme and a proposal
to give Member States more flexibility in setting National Registration
Thresholds.
You will recall that although good progress
had been made on the Proposal to reform the existing cross-border
refund procedure, much more remained to be done on other aspects
of the package, particularly in respect of the proposed One Stop
Scheme. That was reflected in the Finnish Presidency progress
report provided to ECOFIN on 28 November. The conclusion at ECOFIN
was that the work should continue to be a Council priority and
that the dossier would return to ECOFIN in June 2007.
When I wrote to you on 4 May 2006, I mentioned
that the Austrian Presidency would raise the possibility of splitting
this dossier into its two component Directives. This was because
work on reform of the existing cross-border refund procedure was
rather more advanced than other elements of the package. Although
the split approach has yet to be agreed, it still remains a possibility.
The Government would not object to it, as it would potentially
enable reform of the cross-border refund procedure to be agreed
and go ahead separately and to a slightly quicker timescale. Work
on the other simplification measures would then continue in slower
time.
It remains to be seen exactly how the German
Presidency will approach the work. It has scheduled a first meeting
on the dossier under its Presidency for 14 February. I will keep
you informed of any significant developments.
19 February 2007
15 Correspondence with Ministers, 40th Report of Session
2006-07, HL Paper 187, pp 53-54. Back
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