92000E0197

WRITTEN QUESTION P-0197/00

by Elly Plooij-van Gorsel (ELDR) to the Commission

(27 January 2000)

Subject: Reduction of the VAT rate for labour-intensive services

As part of the European experiment to reduce VAT on a number of labour-intensive services, the VAT rate, inter alia for hairdressers, was reduced from 17,5 % to 6 % in the Netherlands on 1 January 2000.

Reports in the press, including from the Dutch hairdressers association, ANKO, indicate that a large number of hairdressers are not passing this VAT reduction on to consumers.

1. Does the Commission share the view that as a result the aim of the directive, which is to reduce moonlighting and create more jobs, is being thwarted?

2. Does the Commission consider that the criteria of Article 1 of the directive are not satisfied if prices are not being reduced as a consequence of the reduction in the tax rate?

3. What does the Commission intend to do in this case?

Answer given by Mr Bolkestein on behalf of the Commission

(21 February 2000)

The Commission has not to date been informed of the situation described by the Honourable Member.

Job creation is indeed the aim of Council Directive 1999/85/EC of 22 October 1999 amending Directive 77/388/EEC as regards the possibility of applying on an experiment basis a reduced VAT rate on labour-intensive services(1). However, the measure is an experiment, which must demonstrate that a VAT reduction actually helps achieve that objective.

It is for the national authorities to take the necessary steps to put the experiment into effect.

The results must then be assessed by the Member States and reported to the Commission, which will analyse them with a view to deciding on follow-up action.

(1) OJ L 277, 28.10.1999.