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VAT
Directive 2006/112/EC, article 1(i) provides that
"the provision of children's or young people's
education, school or university education, vocational
training or retraining, including the supply of services
and of goods closely related thereto, by bodies governed
by public law having such as their aim or by other
organisations recognised by the member state concerned as
having similar objects" can be entitled for
exemptions as they classify as "public
interest".
Reacting
to this argument, the spokesman from the Commission's
local representation retracted from his/her original
statement and acknowledged that "schools and other
institutions are allowed to supply VAT-exempt goods
connected with and essential for the supply of educational
services". He/she added that the Commission
interprets this provision to mean that "no further
VAT is to be charged on the cost-plus VAT incurred by the
institution on the goods".
Thus,
it is evident from the spokesman's own words that a change
from the present situation is possible.
Mr
or Madam Spokesman went on to say that the exemption does
not apply to "private schools".
Again,
I beg to differ.
Nowhere
in the article I quoted above is a differentiation made
between public and private institutions to be found.
Furthermore, the rule of thumb is that exemptions have to
be non-discriminatory. Also worth noting is the fact that,
presently, Malta has a derogation to charge a reduced VAT
rate of not less than five per cent on "supply,
including on loan by libraries, of books (including
brochures, leaflets and similar printed matter, children's
picture, drawing or colouring books, music printed or in
manuscript form, maps [...]), newspapers and periodicals,
other than material wholly or predominantly devoted to
advertising" (annex III[6]). The Commission is
proposing that Malta's derogation be extended to 2010.
Unfortunately, the Maltese government had not asked for a
wider exemption to cover, say, uniforms and stationery.
The
Commission's spokesman missed pointing out an important
fact relating to the ongoing discussion at European Union
level on VAT on education-related products and services.
This is taking place within the context of the new
proposals on VAT reduced rates to replace the various
existent derogations.
One
of the possibilities being actively considered by the
Commission in its own public documents is a three-tier VAT
system whereby educational goods and services would be
eligible to a VAT reduced rate across the EU.
Another
possibility under examination is the granting of more
autonomy to member states in setting reduced rates for
local transactions that would not hinder the workings of
the internal market.
These
proposals are the subject of an interesting debate in the
European Parliament and will lead to new legislative
proposals being put forward by the European Commission by
mid-2009.
Change
is possible and we will argue for that change.
Source
: Times of Malta - Valletta, Malta, dated 15/10/2007
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