EC Takes Several Member States To Task Over VAT On Postal Services

by Ulrika Lomas, for LawAndTax-News.com, Brussels

11 April 2006

The European Commission this week sent formal requests for information to the United Kingdom, Germany and Sweden regarding their VAT treatment of postal services.

The United Kingdom and Germany exempt from VAT all or most postal services supplied by their former postal monopolies, while Sweden does not exempt postal services.

Current VAT legislation is not yet adapted to the postal market that was liberalised by Directive 97/67/EC. The Commission, awaiting the revision of the current legislation according to its proposals, announced that it has taken action in order to ensure a proper application of the VAT postal exemption, and avoid distortions of competition between former monopolies and market entrants.

The requests take the form of letters of formal notice, the first stage of the infringement procedure laid down in Article 226 of the EC Treaty. The Member States involved are invited to reply within two months.

"The European Commission as guardian of the EC Treaties is obliged to ensure EU rules are applied in a harmonised manner across the Community. The VAT exemption for postal services is still part of Community rules and only its proper application can help to minimize distortions of competition in a liberalised market between former monopolies and market entrants," explained László Kovács, European Commissioner for Taxation and Customs.

He added:

"I urge the Council of the European Union to adopt as soon as possible the Commission proposal concerning VAT rules on postal services...in order to modernise the current legislation and respond to the needs of today."

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