92001E2431

WRITTEN QUESTION E-2431/01

by Eryl McNally (PSE) to the Commission

(7 September 2001)

Subject: 6th VAT Directive

The 6th VAT Directive provides a reduced rate of VAT for energy saving materials, which is applicable where individuals pay to have these materials installed in their homes. However, the reduced rate does not apply when individuals purchase such materials in order to install them in their homes themselves.

Would the Commission please comment on whether consideration is being given to the removal of this anomaly from the 6th VAT Directive?

Answer given by Mr Bolkestein on behalf of the Commission

(29 October 2001)

The situation under current Community VAT legislation is that category 9 of Annex H of the sixth VAT Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes Common system of value added tax: uniform basis of assessment(1) covers the process of the supply, construction, renovation and alteration of housing provided as part of social policy. Member States may therefore allocate a reduced VAT rate of no less than 5 % to these services.

Energy saving materials, once incorporated into this process, are automatically covered by this provision, as will be all building materials when supplied as a part of a service provided by a building contractor. Whereas the same goods when bought across the counter by an individual are considered to be supplies of goods, and therefore the standard rate applies.

As the Honourable Member will know, the new VAT strategy(2) foresees that a review and rationalisation of the rules and derogations applying to the definition of reduced VAT rates will be considered in the medium term. Particular attention will be paid to such issues.

(1) OJ L 145, 13.6.1977, p. 1. Directive as last amended by Directive 2001/41/CE (OJ L 22, 24.1.2001) et corrigendum (OJ L 26, 27.1.2001).

(2) COM(2000) 348 final.