The Council of the European Union (ECOFIN):
- WELCOMES the Commission Communication "Towards a single EU VAT area - Time to decide" (VAT Action Plan) and TAKES NOTE of the Special Report of the Court of Auditors No. 24: "Tackling intra-Community VAT Fraud: More action needed", as well as of the findings and recommendations set out therein;
- RECALLS Council conclusions of 15 May 2012 "On the Future of VAT", where the Council has emphasised that the EU needs a simpler VAT system, which at the same time is more efficient, more robust, fraud-proof and tailored for single market and has pointed out the following principles and legal considerations, which should be taken into account in furtherance of any future action: cost-efficiency, proportionality, unanimity, data protection legislation, compliance with the subsidiarity principle and full respect for the respective competences of the Union and the Member States;
- AGREES that the EU VAT system needs to be modernised and improved with these general objectives in mind, while stressing the importance of keeping the EU's business environment competitive;
- ACKNOWLEDGES the objectives outlined in the VAT Action Plan, which provide a framework to achieve a Single EU VAT area, and
- ADOPTS the following conclusions:
I. ON URGENT MEASURES TO FIGHT VAT FRAUD AND TACKLE THE VAT GAP
The Council of the European Union:
1. RECALLS the utmost importance of robust legal rules which hamper VAT fraud and AGREES with the Commission and the Court of Auditors that improving administrative cooperation between tax authorities is of significant importance in the fight against VAT fraud, and hence UNDERTAKES to pursue discussion on means of enhancing the scope of administrative cooperation and stepping up efforts to exchange information between tax administrations;
2. CONFIRMS that there is a need for further co-operation in a spirit of good understanding among business and tax administrations, as well as between tax administrations of EU Member States;
3. UNDERLINES that further initiatives in this area should form an efficient addition to existing rules and instruments and also seek to guarantee high standards of data protection, and fully take into account the principles of sovereignty, subsidiarity and proportionality;
4. TAKES NOTE of the Commission's intention to table in 2017 a legislative proposal that will aim at improving the exchange, sharing and analysis of key information and foresee conducting of joint audits;
5. ACKNOWLEDGES that improvement of information exchange could result in a clear improvement of efficiency in the fight against VAT fraud, and CALLS upon the Commission to propose ways of addressing legal obstacles and practical limitations that might exist in the EU and in the Member States that prevent from making a qualitative leap in this area in the EU;
6. HIGHLIGHTS that this work should promote co-operation and cover the full range of available means and methods and alignment of procedures, including, inter alia, VIES, Eurofisc, feedback procedures and customs procedure 42, where the challenges both to customs and tax authorities must also be addressed;
7. LOOKS FORWARD to the other measures referred to in the VAT Action Plan that the Commission will propose to the Council with the objective of improving cooperation between tax administration and customs authorities;
8. UNDERLINES that as discussed during an informal meeting of ECOFIN ministers in Amsterdam, automatic exchange of information is one of the ways forward in the fight against fraud;
9. CONFIRMS that risk assessment and analysis remains a major area for further improvement in the EU, and INVITES the Commission, after the results of the feasibility study on Transaction Network Analysis have been evaluated by Member States, to present relevant initiatives enabling the Member States, wishing to start this tool on a voluntary basis, to exercise such an option, and at the same time ASKS the Commission to consider the possibilities of an explicit legal basis;
10. RECOGNISES that some Member States are more heavily affected by VAT fraud than others and the need to find practical and short-term solutions rapidly, and TAKES NOTE of the position of the Commission regarding a possible temporary derogation for certain Member States to apply the reverse charge mechanism in a wider scope and that the implementation of such derogation would require legislative measures;
11. CONFIRMS that such derogations should not disproportionally hamper the proper functioning of the internal market;
12. UNDERLINES, without prejudice to a definitive VAT system, that the information obtained from a temporary derogation could be useful to decide on the most efficient way of fighting VAT fraud, and LOOKS FORWARD to an in-depth analysis by the Commission on possibilities for a temporary derogation, to be presented at the upcoming June ECOFIN;
13. TAKES NOTE of the non-legislative measures whereby the Commission intends to tackle the VAT gap and STRESSES that the Council will examine these non-legislative measures on the basis of the principles of sovereignty, subsidiarity, and proportionality.
II. ON SHORT AND MEDIUM-TERM ACTIONS IN VAT AREA AND SMEs
The Council of the European Union:
14. WELCOMES the call by the Commission to reduce VAT compliance burdens for business, particularly for SMEs, both within Member States and across borders, and TAKES NOTE of the Commission's intention to make legislative proposals in 2016 and 2017;
15. EMPHASISES that the ultimate objective remains that VAT compliance costs in the single market are brought closer to the levels of those in domestic trade, however, further simplification should not result in an increase of VAT fraud risks or disproportionate rise of the costs of tax administration;
16. HIGHLIGHTS the importance of reflecting upon the position of micro-SMEs in the VAT system, in order to promote growth, jobs and real economy in the EU, without causing distortions of competition;
17. In the context of the Digital Single Market Strategy, STRESSES the importance of finding an EU-level solution rapidly to eliminate the competitive disadvantage for EU suppliers and UNDERTAKES to review the scope and discuss the possibility of repealing the VAT exemption for final importation of small consignments of goods into the EU by non-EU suppliers, considering also the impact of possible changes on the customs administration;
18. RECOGNISES the need to simplify cross-border e-commerce, and the opportunity to extend the "One Stop Shop" for online sales of tangible goods to final consumers and CALLS FOR further analysis and technical work to be undertaken on a common EU-wide simplification measure, including a threshold;
19. NOTES that the debate will continue concerning a possible introduction of legal means allowing for home country checks, including a single audit of cross-border businesses;
20. In this context, LOOKS FORWARD to receiving the results of the ongoing Commission' study on VAT obstacles to cross-border e-commerce and the legislative proposals by the Commission;
21. STRESSES that improvements on the current system could be possible and necessary in the short term.
III. ON THE DEFINITIVE VAT SYSTEM (SINGLE EU VAT AREA)
The Council of the European Union:
22. TAKES NOTE of the points made by the Commission in its VAT Action Plan as regards the way forward towards the definitive VAT system and of its intention to present a legislative proposal in 2017 for the definitive VAT system for cross-border trade, as a first step;
23. NOTES, while working towards the definitive VAT system in the EU, the importance of fully respecting the principles of subsidiarity and proportionality and taking full account of how potential EU-level solutions would best fit with the aspects upon which Member States continue to exercise their competence;
24. REITERATES that the principle of “taxation in the Member State of origin of the supply of goods or services”, as envisaged in article 402 of Directive 2006/112/EC on the common system of value added tax, should be replaced by the principle of “taxation in the Member State of destination” for the definitive VAT system for B2B transactions, as stated in the Council conclusions of 15 May 2012;
25. WELCOMES the in-depth technical work conducted by the Commission so far, as well as the broadly based dialogue it initiated with Member States to examine in detail the different possible ways how to best implement the destination principle;
26. STRESSES nevertheless that the work has to continue to set ground for the political choice to be made with regard to the definitive VAT system;
27. TAKES NOTE that taxation with cross-border reverse charge in the Member State of destination could be analysed as an option to the proposed taxation of cross-border supplies for the definitive VAT system;
28. UNDERSCORES that the Council will continue to follow up the debate to reach an agreement on the political guidance to the Commission to conduct further analysis that would enable it to carry this work forward and enable the Council to properly evaluate the impact of possible technical solutions and adopt those that suit the common EU objectives best.
IV. ON VAT RATES
The Council of the European Union:
29. TAKES NOTE of the directions of action proposed in the Commission Action Plan on VAT with regard to the VAT rate system and its intention to make a legislative proposal in 2017, proposing a reform to give more freedom to Member States in setting up rates and proposing two options;
30. RECALLS the conclusions of the European Council of 17-18 March 2016 which welcomed "the intention of the Commission to include proposals for increased flexibility for Member States with respect to reduced rates of VAT, which would provide the option to Member States of VAT zero rating for sanitary products";
31. WELCOMES the intention of the Commission to present a proposal for increased flexibility for Member States, so that they could benefit from the existing reduced and zero rates in other Member States, INVITES the Commission to include an impact assessment, and STRESSES that a sufficient level of harmonisation in the EU remains required and the adopted solution has to be carefully balanced to avoid distortion of competition, rise in business costs and negative impact on the functioning of the single market;
32. INVITES the Commission to present a legislative proposal which integrates provisions concerning VAT rates for e-publications in the context of Digital Single Market initiatives by the end of 2016 and include an impact assessment;
33. CALLS UPON the Commission, in line with the March 2016 European Council conclusions, to present to the Council a legislative proposal foreseeing an option to Member States of VAT reduced or zero rating for women's sanitary products at the earliest opportunity.
On 25 May 2016, the EU agreed new rules on medical devices and in vitro diagnostic medical devices.
The Netherlands presidency of the Council and representatives of the European Parliament reached a political agreement. It is still subject to the approval by the Council's Permanent Representatives Committee and of the Parliament's ENVI committee.
The agreed two draft regulations are expected to achieve a twofold aim: making sure that medical devices and in vitro diagnostic medical devices are safe while allowing patients to benefit of innovative health care solutions in a timely manner.
Medical devices and in vitro diagnostic medical devices cover a wide range of products, from sticking plasters to hip replacements, and from pregnancy tests to HIV tests.
"This agreement matters to all citizens: sooner or later all of us enter into contact with medical devices to diagnose, prevent, treat or alleviate diseases. The deal reached will improve patients' health and it will help to enhance the quality of life of disabled persons. It will also ensure a level playing field for the 25 000 medical devices manufacturers in the EU, many of which are SMEs and which employ more than half a million persons", said Edith Schippers, Minister of Health of the Netherlands and President of the Council.
The agreement reached seeks to ensure the safety of medical devices by two means: by strengthening the rules on placing devices on the market and tightening surveillance once they are available.
The agreement will further tighten the rules for the independent bodies that are responsible for assessing medical devices before they can be placed on the market. The new rules will strengthen the surveillance of these so-called notified bodies by national authorities. They will also give these bodies the right and duty to carry out unannounced factory inspections. Notified bodies will have to ensure that they have available qualified personnel.
The draft regulations establish explicit provisions on manufacturers' responsibilities for the follow-up of the quality, performance and safety of devices placed on the market. This will allow manufacturers to act swiftly when concerns arise and help them to improve their devices continuously on the basis of actual data. Manufacturers and other economic operators will have clear responsibilities, for instance on liability, but also on registering complaints on devices. The draft regulations also improve the availability of clinical data on devices. The protection of patients participating in clinical investigations will also be strengthened.
Strengthened rules for high risk devicesCertain high risk devices, such as implants, may undergo an additional check by experts before they are placed on the market. Expert panels and laboratories will play a key role in supporting the legislative system, to provide expertise and guidance on clinical aspects to notified bodies, competent authorities and to manufacturers.
The new EU rules also explicitly cover certain devices without a medical purpose but with similar characteristics as medical devices. This concerns for instance fillers and coloured contact lenses for cosmetic purposes.
More transparency for patients and increased traceabilityA central database will be set up to create an improved system for all relevant information. It will cover economic operators, notified bodies, market surveillance, vigilance, clinical investigations and certificates. In addition, it will provide patients, healthcare professionals and the public with comprehensive information on products available in the EU. This will enable them to make better informed decisions. Patients who are implanted with a device will be given key information on the product, including any precautions which might need to be taken.
Devices will have a unique identification number to provide for traceability throughout the supply chain to the end-user or patient.
Next stepsThe Council's Permanent Representatives Committee will be invited to endorse the agreement probably mid-June 2016. Once the Parliament's ENVI committee has also confirmed that it can accept the compromise the Council will be invited to confirm the agreement. Following the revision of the texts by the lawyer-linguists the two regulations will have to be formally adopted by the Council and the Parliament. The new rules will apply three years after publication as regards medical devices and five years after publication as regards in vitro diagnostic medical devices.
1. The forty-fifth meeting of the EEA Council took place in Brussels on 25 May 2016 under the Presidency of Mr Bert Koenders, Minister of Foreign Affairs of the Netherlands, representing the Presidency of the Council of the European Union. The meeting was attended by Ms Aurelia Frick, Minister of Foreign Affairs of Liechtenstein, Ms Lilja Dögg Alfreðsdóttir, Minister for Foreign Affairs of Iceland, and Ms Elisabeth Aspaker, Minister of EEA and EU Affairs of Norway, as well as by Members of the Council of the European Union and representatives of the European Commission and the European External Action Service.
2. The EEA Council noted that, within the framework of the Political Dialogue, the Ministers would discuss the migratory and refugee crisis, Russia and Ukraine, the EU Global Strategy on foreign and security policy, including cooperation in the Arctic. An orientation debate was held on the state of play of the Better Regulation agenda and its impact on the EEA.
3. The EEA Council acknowledged the key role played by the EEA Agreement for more than 20 years in advancing economic relations and internal market integration between the EU and the EEA EFTA States. The EEA Council highlighted that the Agreement had been robust and capable of adapting to changes in EU treaties and EU enlargements. The EEA Council recognised that increased efforts towards enhancing competitiveness would be key for jobs and growth in Europe.
4. The EEA Council emphasised the importance of a well-functioning Single Market as a driver in boosting economic growth and creating new jobs throughout Europe, and welcomed the steps already taken to implement the proposals contained in the strategies for a Digital Single Market and for upgrading the Single Market, both launched in 2015, with a view to exploiting in full its untapped growth and productivity potential. The EEA Council agreed that a holistic approach is required to tackle some of the main challenges facing the Single Market, and stressed the importance of close involvement of the EEA EFTA States in the further design and development of single market policies and initiatives.
5. Noting the Progress Report of the EEA Joint Committee, the EEA Council expressed its appreciation for the work of the Joint Committee in ensuring the continued successful operation and good functioning of the EEA Agreement.
6. The EEA Council emphasised the importance of solidarity among the countries of Europe to overcome social and economic challenges. In particular, the EEA Council expressed concern regarding the continued high level of youth unemployment in some EEA Member States.
7. The EEA Council recognised the still existing need to alleviate social and economic disparities in the EEA, as well as the positive contribution of the EEA and Norway Financial Mechanism 2009-2014 and of their predecessors in reducing economic and social disparities throughout the EEA.
8. The EEA Council welcomed the signature on 3 May 2016 of the Agreement on an EEA Financial Mechanism 2014-2021 and of the Agreement between Norway and the EU on a Norwegian Financial Mechanism for the 2014-2021 period.
9. The EEA Council also welcomed the signature on 3 May 2016 of the protocols on trade in fish and fisheries products between Norway and the EU and Iceland and the EU and called for a swift conclusion of the necessary work.
10. Emphasising the fact that greater knowledge of the EEA Agreement throughout the EEA is in the interest of all Contracting Parties, the EEA Council urged them to ensure that information on the EEA Agreement is made readily and easily available.
11. The EEA Council noted that free movement of capital is a fundamental internal market freedom and an integral part of the EEA acquis and acknowledged that restrictions can be implemented only temporarily on the basis of the provisions of Article 43 of the EEA Agreement.
12. The EEA Council welcomed the significant progress towards finalisation of the EEA Joint Committee Decisions of the first package of legal acts related to the EU Regulations on the European Supervisory Authorities in the area of financial services. It stressed the need to swiftly finalise the necessary procedures to allow for the incorporation into the EEA Agreement and the rapid entry into force of these acts in order to ensure effective and homogenous supervision throughout the EEA, as called for by the EU and EEA EFTA Ministers of Finance and Economy at their informal meeting of 14 October 2014. The EEA Council also highlighted the high importance of promptly incorporating and applying the other outstanding legislation in the field of financial services as soon as possible in order to ensure a level playing field throughout the EEA in this important sector.
13. The EEA Council placed great importance on continued close cooperation between the EU and the EEA EFTA States in environment, energy and climate change polices, particularly in light of the 2030 Framework for Climate and Energy and the Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy. The close cooperation should also continue in particular in the areas of internal energy market, energy security, emissions trading, promotion of competitive, climate resilient, safe and sustainable low carbon energy, energy efficiency, renewable energy resources, carbon capture and storage (CCS) and carbon capture and utilisation (CCU), as well as other environmental issues such as waste, chemicals, water resource management and industrial pollution.
14. The EEA Council welcomed the efforts and close cooperation of the EU, its Member States and the EEA EFTA States in the preparations of the 21st Conference of the Parties (COP21) of the United Nations Framework Convention on Climate Change (UNFCCC) in Paris in December 2015. The EEA Council highlighted that this cooperation had contributed to the adoption of an ambitious, dynamic, durable and legally binding global agreement. In order to hold the increase in the global average temperature well below 2ºC, and to pursue efforts to limit it to 1,5° C above pre-industrial levels, as well as to foster climate resilience and low greenhouse gas emissions development, parties aim to reach global peaking of greenhouse gas emissions as soon as possible and to undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century. The EEA Council underlined the need to maintain the momentum after COP21 and focus on implementation, at the international level and domestically, in particular in relation to the Intended Nationally Determined Contributions (INDCs) and the 2030 climate and energy framework. In this regard, the EEA Council welcomed the opening for signature of the Paris Agreement on 22 April 2016 in New York and underlined the need for the EU, its Member States and the EEA EFTA States to be able to ratify the Paris Agreement as soon as possible and on time so as to be Parties as of its entry into force.
15. The EEA Council welcomed the ongoing efforts made to both reduce the number of EEA-relevant EU acts awaiting incorporation into the EEA Agreement and to accelerate the incorporation process. While commending all the steps undertaken in the course of the last years, the EEA Council noted that the number of acts awaiting incorporation was still too high. The EEA Council called for continued work in order to significantly and durably reduce the current backlog and thereby ensure legal certainty and homogeneity in the EEA. It urged all parties to engage constructively to find solutions to pending difficult issues.
16. With regard to the Third Package for the Internal Energy Market, the EEA Council welcomed progress made in recent months with regard to EEA EFTA participation in the Agency for the Cooperation of Energy Regulators (ACER), and underlined the importance of swiftly finalising this work in order to establish a fully functional internal market for energy.
17. The EEA Council welcomed the incorporation into the EEA Agreement of the public procurement legislative framework and progress made in recent months with regard to the 2009 regulatory framework for electronic communications (including the Regulation on the Body of European Regulators for Electronic Communications - BEREC), and the Regulation on Medicinal Products for Paediatric use.
18. The EEA Council noted that progress was still needed on a number of important outstanding issues and looked forward to reaching a conclusion as soon as possible, in particular regarding the Third Postal Directive, the EU legal acts in the area of organic production as well as in the area of common rules and standards for ship inspection and survey organisations.
19. The EEA Council noted that there was a number of Joint Committee Decisions, for which the six-month deadline provided for in the EEA Agreement with regard to constitutional clearance had been exceeded. It encouraged the EEA EFTA States to strengthen their efforts to resolve the pending cases as soon as possible and to avoid such delays in the future.
20. The EEA Council acknowledged the significance of the negotiations on a Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States. The EEA Council welcomed the continuous exchange of information between the European Commission and the EEA EFTA States, initiated in the EEA Joint Committee in December 2014. Bearing in mind inter alia Protocol 12 to the EEA Agreement, the EEA Council encouraged a continuation of this exchange of information.
21. The EEA Council acknowledged that the Contracting Parties, pursuant to Article 19 of the EEA Agreement, had undertaken to continue their efforts with a view to achieving the progressive liberalisation of agricultural trade. The EEA Council looked forward to the signing of the Agreements on the further liberalisation of agricultural trade and on the protection of geographical indications between the EU and Iceland, which were initialled on 17 September 2015, in the near future.
22. The EEA Council took note of the lack of progress in the negotiations between the EU and Norway on the protection of geographical indications and noted the suspension of the talks for the time being. However, the EEA Council welcomed the progress made in the negotiations between the parties on further liberalisation of agricultural trade within the framework of Article 19 launched in February 2015 and encouraged the parties to actively continue their efforts for further progress in the negotiations.
23. The EEA Council looked forward to the adoption of the Joint Committee Decision related to the agreement on the further liberalisation of trade in processed agricultural products within the framework of Article 2(2) and Article 6 of Protocol 3 to the EEA Agreement between Iceland and the EU, which was concluded on 17 September 2015, in the near future.
24. The EEA Council encouraged the Contracting Parties to continue the dialogue on the review of the trade regime for processed agricultural products within the framework of Article 2(2) and Article 6 of Protocol 3 to the EEA Agreement in order to further promote trade in this area.
25. Acknowledging the contribution made by EU programmes to building a more competitive, innovative and social Europe, the EEA Council welcomed the participation of the EEA EFTA States in EEA-relevant programmes to which they contribute financially.
26. The EEA Council underlined the importance of continuing the practice of inviting officials from the EEA EFTA States to political dialogues held at the level of the relevant EU Council working parties.
27. The EEA Council underlined the importance of inviting EEA EFTA Ministers to informal EU ministerial meetings and ministerial conferences relevant to EEA EFTA participation in the Internal Market, and expressed its appreciation to the current Dutch and incoming Slovak Presidencies for the continuation of this practice.
28. The EEA Council recognised the positive contributions made by the EEA EFTA States to the decision-shaping process of EEA-relevant EU legislation and programmes through their participation in the relevant committees, expert groups and agencies, as well as through the submission of EEA EFTA Comments.
29. The EEA Council noted the Resolutions of the EEA Joint Parliamentary Committee adopted at its meeting in Vaduz on 19-20 May 2016 on The Single Market Strategy for Goods and Services, and on The Collaborative Economy, and of the EEA Consultative Committee adopted at its meeting in Vaduz on 19-20 May 2016 on Labour mobility in the EEA and on Better Regulation to support businesses and protect workers in the EEA.