Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-09-24-Speech-3-432"
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"en.20080924.35.3-432"2
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"Madam President, I would like to start by thanking Mr Muscat for his work and the support he has given to the Commission’s proposal, and I wish him success in his future role in Malta.
Second, to avoid their business customers incurring non-deductible ‘hidden’ VAT, the proposal aims at allowing all banking and insurance companies to opt to tax their services.
Third, the proposal contains an exemption from VAT on cost-sharing arrangements, including those which operate across borders.
These proposals could result in some limited initial VAT revenue reductions for the Member States, but these can be justified if, as we expect, the proposed changes lead to increased competitiveness.
I therefore welcome the observation in the report on the problems of non-recoverable VAT and its relevance to business efficiency and the Lisbon strategy. I also welcome the fact that the rapporteur recognises that change may result in a reduction in VAT receipts.
For consumers, I agree that the implications are not always clear-cut, but I believe they will eventually benefit from cost savings achieved within the industry.
I also welcome the positive remarks about the scope of the proposal and the creation of legal certainty. The new definitions proposed by the Commission are necessary to bring the legislation into line with economic realities.
I sympathise with the remarks on the need for prudence and the absence of reliable figures which would allow the impact of change to be fully assessed. This latter lacuna should not, however, be laid at the feet of the Commission, as neither the industries concerned nor national administrations could provide the necessary data.
Like Mr Muscat, I am conscious that cross-border consolidation in the finance industry increasingly results in VAT revenue accruing to the Member State where the service is created, rather than where the consumer of the service is established. A move from exemption to taxation, which would result from greater access to the option to tax as we have advocated in this proposal, would correct this trend. I think this is the best way to deal with the concerns which have been raised.
Finally, I would like to inform you that detailed discussions on this proposal already started in the Council under the recent Slovenian presidency. The current French Presidency is also committed to making progress on this particular dossier, and I therefore welcome the positive engagement by Parliament which can further encourage the Council to make progress.
The Commission proposal addresses three major issues.
First, the existing provisions are increasingly subject to legal challenge in the European Court of Justice. Something needs to be done about this.
Second, we need more consistent application of the VAT rules on financial services and a more level playing field in the internal market.
Third, we must take steps to improve competitiveness in the sector.
There are concerns that the financial services and insurance industries in the European Union are less efficient than they should be, and consequently EU industry faces higher costs for financial services and insurance than its competitors in third countries. This is not solely a result of the EU’s VAT rules, but they do have a role in contributing to this situation. I have to add that VAT exemption is not applied uniformly in the different Member States, and this causes competitive distortions within the European Union. For example, the possibility of recovering tax paid to specialist third-party service providers (outsourcers) varies depending on national interpretation of the VAT rules.
For the Commission, improving the competitiveness of our European financial and insurance companies was therefore a factor in making this proposal, but the reality is that this must be balanced against the need of the Member States to ensure stable tax revenues.
The proposal has three elements.
First, to increase legal certainty for all concerned, we propose a modernised definition of the exempt services."@en1
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