92000E4070

WRITTEN QUESTION P-4070/00

by James Fitzsimons (UEN) to the Commission

(20 December 2000)

Subject: VAT on solar panels and encouraging greater use of vegetable oils for fuels

As a means of promoting environmentally friendly technologies, does the Commission have any plans to bring forward special proposals aimed at introducing either a zero rate of VAT for solar panels

or establishing a specially low VAT rate in order to encourage greater use of non-polluting energy sources and to reduce the use of materials which give rise to pollution and will the Commission outline what its present and future plans and incentives are for encouraging greater use of oils derived from vegetables which can be used in motor vehicles and commercial fleets?

Answer given by Mr Bolkestein on behalf of the Commission

(1 February 2001)

The situation under current Community VAT legislation is that category 9 of Annex H of the 6th Council directive 77/388/EEC(1) covers 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.

Solar panels, once incorporated into this global process, are automatically covered by this provision, just as all building material when they are 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 as supply of goods, and therefore the standard rate applies.

As far as the zero rate is concerned, it must be noted that it is an exception to the normal rules which foresee that the standard VAT rate should apply to any taxable transaction as a consumption tax.

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 should be considered in the medium term. Particular attention will be paid to the rates applying to the use of reduced VAT rates in Community policies (e.g. to help protect the environment, etc.).

(1) OJ L 145, 13.6.1977, Directive as last amended by Council Directive 2000/65/CE, of 17 October 2000 (OJ L 269, 21.10.2000).

(2) COM(2000) 348 final.